Labour/Green nationalisation policy may destroy 50% of Meridian’s value

October 31st, 2013 at 1:00 pm by David Farrar

Stuff reports:

’s partial float on the New Zealand stock exchange was given an initial thumbs up by analysts but they warn the share price is likely to be volatile heading into next year’s general election.

One fund manager said the difference in share price between Labour and National could be as much as 90 cents.

The Government has sold 49 per cent of the country’s largest energy company for $1.50 a share. Investors paid an initial instalment of $1, with a further payment of 50 cents due in 18 months.

The first instalment price at the close of the NZX last evening saw the shares leap 8 per cent to $1.08 on turnover of just over $246 million.

Analysts agreed that day one of the float was successful and the closing share price was in line with expectations.

Devon Funds Management equity analyst Phillip Anderson said new investors would be pleased. “It’s enough for the new investors to be happy – they are feeling good about it – but not so much that it looks like the seller left a lot on the table.”

The general feeling among analysts was that institutions which had their share quotas scaled back had created strong demand for Meridian shares.

But the analysts warned that the general election could affect the share prices of both Meridian and Mighty River Power, which was partly privatised this year.

“My valuation for . . . [Meridian] as a whole is . . . around $1.10 if the Labour Party wins, but business as usual under National at around two bucks,” Anderson said.

That’s a huge amount of destruction of value if there is a change of Government. And consumesr won’t see any of it as Labour/Green changes to the Emissions Trading Scheme will see power prices increase.

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34 Responses to “Labour/Green nationalisation policy may destroy 50% of Meridian’s value”

  1. dave_c_ (219 comments) says:

    Close to treason indeed

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  2. BeaB (2,123 comments) says:

    And worst of all Clayton Cosgrove and Russel Norman are ecstatic at what they have cost Kiwis. No shame or regrets at all.
    They are quite happy to destroy our economic future if it means they can get back into power or score points against the government. They have no sense of responsibility or loyalty.
    What disgraceful little men they both are. I can’t bear listening to either of them with their nasty nasal voices.
    Why do we allow Norman, an Australian, to wreck our future?
    Why do both of them get so much support from the media?
    Radio NZ gives both of them free air time with no interruptions or hard questions.

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  3. sparky (235 comments) says:

    #BeaB,
    I so agree with you. How can people listen to that pompous little Clayton Cosgrove, and the Ginger Aussie. They are such little NO ALLS, that actually know nothing. Nasty Nasal little creeps. Who couldn’t care a less about the country or the people. There party’s are vote for us and we will throw you a few crumbs. I mute the TV every time I see there ugly faces.

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  4. lastmanstanding (1,297 comments) says:

    And that’s why as a habitable investor I didn’t buy MRP or Meridian cause if the worst happen and Lab/Greens form the next government I will be able to buy both for a song and at a stunning div yield.

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  5. freedom101 (504 comments) says:

    The taxpayer still owns 51%, so the destruction in value will:

    (1) Damage the Crown’s balance sheet,
    (2) Reduce the Crown’s dividend,
    (3) Reduce the Crown’s tax revenue from the 49% private owners.

    This is pretty much what most Labour/Green policies do, so it’s no surprise, but on this occasion the losses will be visible and quantifiable.

    Another good reason to employ a MoM for these assets.

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  6. policyparrot (11 comments) says:

    caveat emptor

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  7. BeaB (2,123 comments) says:

    I think in this case it’s caveat to the voter because these nasty, destructive, treacherous little men could be running the country!

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  8. wreck1080 (3,917 comments) says:

    I don’t think the whole sale process has been great.

    The government did not make enough from the sales IMHO.

    The cost of selling, the writedown in asset values, and the loss of dividends has made the sales nowhere near as lucrative as first anticipated.

    John Key tries to put some positive spin on it, but , I think he would be disappointed too.

    Labour really did go all out to sabotage the asset sales though and are partly to blame for a loss in sales value.

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  9. alex Masterley (1,517 comments) says:

    What policy parrot says.
    I purchased shares n Meridian and MRP knowing what the G/L policy was. I will buy more if G/L become government to add to a foundation to a diversified portfolio of shares.
    As an aside Mr Cunliffe is well versed in destruction of shareholder value. Look at his efforts with Telecom in the last Labour government.

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  10. BeaB (2,123 comments) says:

    Cunliffe, Labour and the Greens don’t care about NZ and don’t care about us.

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  11. kowtow (8,487 comments) says:

    National should have had a referendum specific to this issue ,instead of claiming a GE mandate for it ,which is always dodgy.

    We do need more electorate input to major policy issues.

    The Nats have only themselves to blame for this.

    And with a specific mandate they could’ve and should’ve sold the whole lot instead of a pathetic partial sale which still see’s us as the major share holder.

    Labour Lite.

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  12. Sector 7g (242 comments) says:

    When a countries population is driven by envy, a post like this will lead to a boost in the polls for Labour/Greens.

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  13. flipper (4,067 comments) says:

    kowtow (5,527) Says:
    October 31st, 2013 at 1:38 pm
    National should have had a referendum specific to this issue
    ****

    Go and cow your tow, arsehole
    Am I angry, pissed off? Yes, and I make no apology that that.

    Did your arsehole MoF, Cullen, and the lesbians Clark and Simpson, hold a referendum on Student loans?
    Did tey hold one on theiir a billion dollar splurge on rail?

    Was either an election campaign issue? The hell they were.

    Take your stupidity and stick it up Cun*liffe’s jumper.

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  14. Judith (8,534 comments) says:

    @ BeaB (1,785) Says:
    October 31st, 2013 at 1:36 pm

    Really? And selling assets that such a large number of people apparently object to, and refusing to listen to a referendum on the issue is ‘caring’ about the people is it?

    Personally I couldn’t care either way – I wasn’t stupid enough to buy any shares and if the bottom falls out of the price there is only one person to blame. Key knew this was controversial but he went ahead anyway because he had no plan B. That is perhaps my biggest criticism of the man – and the sole reason I didn’t vote for him in the last election, despite voting for him in the previous one. No decent leader with vision restricts themselves to only one option.

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  15. kowtow (8,487 comments) says:

    piss flapper

    Did Key roll back any Labour splurges ? No! Mr No balls. But Labour will roll back Keys’. Labour Lite.Hahahaha

    My suggestion is one that would have saved Key’s flagship policy.
    Now go stick your own head up your wet flaps.

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  16. flipper (4,067 comments) says:

    Kowitower…… or whatever…..

    Take your silly views and place them on the Standard. ….. or up Cun*life’s jumper….

    Your comments simply confirm that you are still back in the stupid eggs/omlet taste of socialism. But then, come to think of it, it has never escaped from that trap.
    F Off.

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  17. Manolo (13,780 comments) says:

    Is this the same ETS, the Labour scam that Labour Lite embraced and implemented? Just asking.

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  18. RJL (146 comments) says:

    Who cares about the share price?

    The “value” of the electricity companies to NZ citizens is in the capacity to generate and supply electricity.

    If the share price tanks, then the government can buy the shares back at a much lower cost than the original sale — and keep the profit! Surely, that would count as a win for the Union of Taxpayers?

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  19. kowtow (8,487 comments) says:

    piss flaps seeks to lecture me on socialism ,when his Nats flagship policy is a partial asset sale that still sees the taxpayer as the major shareholder…….bwahahahahha.

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  20. srylands (410 comments) says:

    “No decent leader with vision restricts themselves to only one option.”

    I would rather they adopted the wealth advancing options. As opposed to random ones. Or wealth destroying ones. Sometimes there is one option. The right one.

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  21. flipper (4,067 comments) says:

    kowtow (5,530) Says:
    October 31st, 2013 at 2:41 pm
    *****

    Thick as pig shit

    Ever heard of “The Real Majority”?
    Clearly, no.
    That is why your ideas are from file 13.

    Playing meaningless games that you will never win kowi towie…..
    or put another way ……
    You are simply ” Dancing with Wolves” – and apologies to a great movie..

    Go away.

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  22. kowtow (8,487 comments) says:

    Dancing with wolves a great movie?

    White man bad,brown man good.White man destroy environment ,brown man live in harmony.You’re just another prog.

    Keep flapping Labour Lite fan boy.

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  23. Lance (2,655 comments) says:

    Do any of the lefty fruit loops actually realize they are fucking over their own future power supply?

    Roll up roll up, spend billions of dollars on generation equipment only to have it nationalized.
    But of course the super heroes at Labour have an answer; borrow a shit load of money, use grossly inefficient means of installing all the vital equipment and hail it all a success.

    Its a brave new world

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  24. chris (647 comments) says:

    Really? And selling assets that such a large number of people apparently object to, and refusing to listen to a referendum on the issue is ‘caring’ about the people is it?

    I’m still unsure if I think the partial sell down of these assets is a good thing or is necessary (note: it’s a partial sell down, not “asset sales” as the media and left like to keep portraying it), but sometimes what needs to be done is not popular.

    And conversely, what is popular is not necessarily the right thing to do. If the government of the day only ever did what is popular, every country would be in the shit like Greece is.

    The main problem with democracy is if you don’t try to please most of the people most of the time, you get voted out and the other side might get in based on promising you the world (and a pony).

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  25. Psycho Milt (2,412 comments) says:

    Yes, this could really damage Labour’s and the Greens’ appeal to the vital “wealthy investor” demographic…

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  26. Fentex (978 comments) says:

    destruction of value

    A minor niggle, because in other contexts the difference matters; price, not value.

    Prices are more volatile than value in investments. If a price is driven down the value of the asset to a buyer may rise with their expectation of profit as they calculate a higher future price.

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  27. Judith (8,534 comments) says:

    @ Lance (2,150) Says:
    October 31st, 2013 at 3:25 pm
    Do any of the lefty fruit loops actually realize they are fucking over their own future power supply?

    Under any neo-liberal government, the country is ‘fucked’ anyway – and I’m not just referring to the current government.

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  28. Jafa (38 comments) says:

    Only a 50% destruction of value. The way Cunliffe and co. were talking I thought it was going to be much closer to 100%. Cunny said they will forgo all the dividends (so therefore a yield of 0% for everyone) and as the government is the majority 51% shareholder they could push this through. They will be the monopoly buyer with NZ power so the companies will probably lose money hand over fist. As we saw with student loans and WFF no amount of money is too much if it means getting Lab/Greens on the Treasury benches. We are still paying for Helens third term. Hate to think what the total bill for the next Labour/Greens fuckup is.

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  29. MikeG (425 comments) says:

    Given that the Labour/Greens policy was known in advance of the Mighty River Power float:-
    1. It was irresponsible to continue with the float, especially as National know they are unlikely to win a 3rd term
    2. The buyers of the shares should have factored this into account when taking on an investment (with associated risks)

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  30. Anthony (796 comments) says:

    Let’s not worry about investors and businesses, particularly ones vital for the country. I’m sure the country can survive OK if they leave and everything of value is owned by the government. I mean, it’s worked so well for North Korea!

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  31. burt (8,271 comments) says:

    If I acted in such a way as to cause a loss of faith in a government asset sale or had stated intention to effect a loss of millions for the crown I would probably be charged with treason and locked up. In politics though it gives you a chance to get your hands on the baubles of office. How fucked up is politics when the players thrash the value of crown assets to be popular with the sheeple.

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  32. edd (157 comments) says:

    And worst of all John Key and Steven Joyce are ecstatic at what they have cost Kiwis. No shame or regrets at all.
    They are quite happy to destroy our economic future if it means they can get back into power or score points against the opposition. They have no sense of responsibility or loyalty.
    What disgraceful little men they both are. I can’t bear listening to either of them with their nasty nasal voices.
    Why do we allow Key, a Banker, to wreck our future?
    Why do both of them get so much support from the media?
    Right wing radio gives both of them free air time with no interruptions or hard questions.

    Kind of makes more sense when you change the names…

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  33. edd (157 comments) says:

    And worst of all John Key and Steven Joyce are ecstatic at what they have cost Kiwis. No shame or regrets at all.

    They are quite happy to destroy our economic future if it means they can get back into power or score points against the opposition. They have no sense of responsibility or loyalty.

    What disgraceful little men they both are. I can’t bear listening to either of them with their nasty nasal voices.

    Why do we allow Key, a Banker, to wreck our future?

    Why do both of them get so much support from the media?

    Right wing radio gives both of them free air time with no interruptions or hard questions.

    Kind of makes more sense when you change the names…

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  34. hannity (152 comments) says:

    Burt, care to explain just where you think the ‘Value’ of the Meridian shares evaporated to?
    Into the ether ?

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