Media Release
27 March 2019

Regional Council adopts additional protections in potential Napier Port IPO

Hawke’s Bay Regional Council voted today to adopt additional protections for its majority ownership position in any future initial public offer (IPO) of shares in Napier Port.

The Regional Council also voted to establish a new Council Controlled Organisation (CCO) to be called Napier Port Holdings Limited, which would be the entity taking a minority stake in Napier Port to market. The decisions made today are subject to a final decision on whether to proceed with a minority listing of the Port.

Regional Council Chair, Rex Graham says the Regional Council was working with the Port and its advisors in preparation for a potential minority IPO; including work on ensuring locals who wanted to buy shares in the Port would be prioritised.

He says with the Regional Council retaining a majority stake in Napier Port post any IPO, and with likely interest from the Hawke’s Bay community and domestic institutional investors, it was likely domestic ownership of Napier Port would remain high post any IPO.

A decision by the Regional Council on whether to proceed with a minority IPO, and detail of any local priority offer, would be made over the coming weeks.

“Creating a new CCO will ensure any share offer is made through one organisation and that liability for the listing and ongoing Port performance would sit with the right parties – the listed company and its directors,” says Mr Graham.

The additional protections supported by the Regional Council today, if a minority listing of the Port goes ahead, include:
• Ensuring the Regional Council’s majority ownership position in Napier Port could not be diluted, such as through any subsequent share issues or equity raising, below 51 per cent in the future
• The right to determine the composition of the Napier Port Holdings and Napier Port Boards through a majority vote
• Appointing two majority shareholder-appointed directors to the Napier Port Holdings and Napier Port Boards
• Reducing the threshold at which Napier Port Holdings and Napier Port would need to seek shareholder approval for significant transactions
• Inserting a restrictive covenant on the strategically important Port land at the main Westshore site, including limiting any potential future sale of the land without Regional Council consent and limiting the use of the Port site to Port purposes.

Mr Graham says existing laws would provide core protections for the Regional Council as majority owner of Napier Port, such as limitations on takeovers and the right to block material transactions and changes to the company constitution.

He says while final decisions on a minority IPO of Napier Port were still to be made, the Regional Council was making decisions that reflected local feedback during the consultation process around protecting local ownership and control of Napier Port without diluting any commercial value of Napier Port.

“Through confirming two majority shareholder-appointed directors and providing for additional protection of its majority ownership position, the Regional Council will gain a more direct level of involvement in the governance of Napier Port on behalf of the local community under a minority IPO.

“It’s important to note that under a minority IPO, all shareholders, including any local investors would enjoy rights to raise matters with the company, to vote and participate in annual meetings and the right to participate in any dividends that may be declared.

“We consulted on a minority IPO with the commitment of retaining majority ownership on behalf of the people of Hawke’s Bay. The decisions made today support those commitments and set the Regional Council up well to consider final decisions on whether to proceed with a minority IPO.

“A final decision is expected by the Regional Council over the next four to six weeks.”

Mr Graham also noted that as part of the preparatory phase of the potential minority IPO of the Port, and consistent with standard practice, the Council has asked the Port and its advisors to begin introducing Napier Port to a range of potential investors in New Zealand and offshore in order to gauge investor appetite and inform the Council’s decision making.

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