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Govt expects $100m in asset sales fees

Thursday 15 Dec 2011 4:08 p.m.

MRP operates under the retail brand Mercury Energy

MRP operates under the retail brand Mercury Energy

By By Paul McBeth

The Government will probably stump up around $100 million in fees to investment banks preparing the partial sell-down of state-owned energy companies, State-Owned Enterprises Minister Tony Ryall says.

He told a media briefing in Wellington the mixed ownership model is a "very very big programme" but he wouldn't expect to pay hundreds of millions of dollars for it.

Rather it would be "more around $100 million". That would work out to be around 1.8 percent of the sale price, which was in line with costs relating to the Contact Energy privatisation in 1999.

In June, Mr Ryall told Parliament's commerce select committee the Treasury's expected range of fees of between 2 percent and 9 percent was at the high end of the scale.

The government confirmed Mighty River Power as the first electricity generator and retailer to go to market, with a sale flagged for the third quarter next year. Treasury officials estimate the company could raise as much as $1.8 billion.

Finance Minister Bill English says the government, as shareholder, is limited in what it can say due to securities market disclosure rules, but more information will be forthcoming next March or April once the lead manager has completed due diligence.

MRP, which operates under the retail brand Mercury Energy, has produced consistently better returns on capital than its two state-owned rivals and candidates for partial sale, Meridian and Genesis Energy.

"It's a very good size to offer Kiwis that should have very good interest to New Zealanders and sufficient scale to market," Mr Ryall said.

The government hopes to raise as much as $7 billion by selling down minority stakes in Meridian, Genesis, MRP, coal miner Solid Energy, and Air New Zealand.

The sale programme will get legislative sign-off as part of the supply and confidence deal with United Future.

Mr English confirmed no shareholder, other than the government, will be allowed to own more than 10 percent of the entities.


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