The MRP share offer

Finally, it is out. The announcement:

New Zealand retail investors in the share offer will receive one loyalty bonus share for every 25 shares they hold for two years from the offer, up to a maximum of 200 bonus shares, Finance Minister Bill English says.

Mr English also announced that the indicative price range for the shares is $2.35 – $2.80 per share, with the final price expected to be announced on 8 May after the retail offer has closed and the institutional offer has been conducted by a book-build process.

“The loyalty bonus scheme that I am announcing today is another way to encourage widespread and substantial New Zealand ownership of shares in MRP,” Mr English says.

“It also recognises the loyalty of those New Zealanders who retain their shares and contribute towards the country’s savings culture.”

The loyalty bonus scheme is available only to New Zealand retail investors – not to institutions in New Zealand or overseas.

A 1 in 25 bonus is basically a 4% premium for holding on. Experienced investors will buy and sell regardless as potential gains are greater than 4% but for first time investors, the bonus will probably encourage them to hold onto their shares for at least the initial period.

People who pre-registered will be posted or emailed copies of the share offer document once the offer opens, expected to be Monday 15 April.

686 million shares are up on offer.

A useful summary of risks is here:

  • The availability of the fuel (mainly water, geothermal fluid and gas) that Mighty River Power requires to generate electricity may reduce for a wide number of reasons;
  • Mighty River Power’s power stations may not be able to generate electricity as expected if they cannot operate in the normal manner or at all;
  • If the Tiwai Point aluminium smelter were to significantly reduce its electricity consumption or cease consumption altogether, the resultant drop in demand could lead to a sustained reduction in electricity prices in general;
  • The wholesale price at which Mighty River Power sells the electricity it generates, or buys electricity to sell to customers, is subject to significant variability and may be unfavourable;
  • The volume and price at which Mighty River Power is able to sell electricity to customers may be adversely affected by competitor behaviour, economic conditions, changes in customer demand or regulatory changes;
  • Investment in geothermal development activity requires significant early stage capital and may encounter unexpected delays, increased costs, a requirement to impair assets or not be commercially viable;
  • International geothermal development faces additional risks associated with operating in jurisdictions outside of New Zealand;
  • Changes in the regulatory environment that adversely impact Mighty River Power;
  • A single (or multiple) catastrophic event generating losses not covered by insurance;
  • Insufficient access to future capital; and
  • Treaty of Waitangi and other Māori claims relating to ownership and governance of land, water and geothermal resources that directly or indirectly impose additional restrictions, conditions or additional costs

I plan to buy shares, despite those risks. There are no rewards without risk. I’m pleased that I will be able to make an individual choice as a citizen about whether to invest my money into Mighty River Power, rather than have the decision solely up to the Government,

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