web analytics
The Standard

The Genesis share float has problems

Written By: - Date published: 8:21 am, February 27th, 2014 - 15 comments
Categories: assets, bill english, david cunliffe, john key, labour, national, privatisation, same old national - Tags:

emerson-privatisation

Bill English yesterday announced that the sale of up to 49% of Genesis Energy’s shares will start from next month.  But this time things will be different from the other sales.  It appears that the Government is preparing itself for the likelihood that demand for the shares will be limited.

According to TV3:

Mr English announced up to 49 percent of shares will be available from next month, with the company expected to be listed on the NZX in mid-April.

The shares will be priced at the beginning of the offer period, as opposed to the end as with previous sales. And unlike previous sales, US institutions will be blocked from owning Genesis shares.

The Government aims to float at least 30 percent of the company’s shares, but Mr English says the true number has not yet been decided.

“Our initial advice is that a smaller Genesis offer could increase price tension in the front-end book build by offering fewer shares to more bidders,” he says.

“We will not know that until we further test demand in the market, where investors now have a wider choice of several energy companies.”

This is basically an admission that the share sale process is flawed.  Treasury had advised the Government to release no more than $1 billion worth of shares in a 12 month period so that the shares could be absorbed by the market.  The Government has released $4 billion worth of shares in the past 12 months.

Genesis was estimated as being worth $1.8 billion in November last year.  If only 30% of the shares are sold then $540 million can be expected before realisation costs are taken out.  But the  figures are likely to be a lot worse.

The Government is considering setting the price so that there is an expected dividend yield of 9% return on investment for the shares.  The last financial year’s dividend payment was $114 million.  If you extrapolate this figure on the basis that the return on investment is 9% then the company is worth $1.26 billion, which suggests that the sale of 30% of the company will yield only $380 million before sale costs.  When you think about the cost of sale and the proposed loyalty bonus National is getting to the stage where it is giving our shares away.

If this amount only is achieved then the Government will fall short of its minimum expectation of $4.4 billion being raised by asset sales.

David Cunliffe has said:

John Key has given up on the Genesis sale before it has even begun by saying he may only be able to sell just 30 per cent of the state asset, Labour Leader David Cunliffe says.

“Everyone knows the Genesis sale is going to be a failure, from the public to investors to Treasury. Now it turns out even John Key knows it.

Not only is it a bad idea to sell off assets in the first place, it’s economic idiocy to sell three in the space of a year. The sharemarket just isn’t that interested. That’s why John Key has admitted he may not be able to sell the full 49 per cent.

Nothing shows this Government has run out of ideas more than the return of the ‘buy-one-get-one-free’ scheme of Mighty River Power. Since then they’ve tried ‘buy-now-pay-later’ with Meridian and ‘Grab-a-Share’ with Air New Zealand but with little success.

John Key has already effective admitted that the asset sales programme has failed. It’s been so unpopular and so unsuccessful that he’s had to say ‘no more sales’ after the election.

He should listen to the people and stop the sales right now. The Genesis sale is the last cab off the rank. The Government should leave it there.”

You have to wonder why the Government is continuing with the share float.  It does not make financial sense and it is terribly unpopular.  There is a sense that a combination of ideological belief that the state should not own anything combined with a politically belligerent refusal to back down are the reasons the Government will continue with the float.

15 comments on “The Genesis share float has problems”

  1. One Anonymous Bloke 1

    What about the unannounced, unmandated privatisation of health and education? Is that going to stop too? Doubt it.

  2. Skinny 2

    Houston we have a problem!

    Or in the eyes of the public, Dipton you have a problem!

  3. bad12 3

    English tho sees no problem, there is plenty of other assets that this Government can sell according to this ‘economic Neanderthal’ on RadioNZ National this morning,

    Take Government owned property for instance said Bill, there’s thousands of State Houses out there that ‘We’ don’t need and selling them will cover any shortfall in the Asset Sales act of theft,(the latter 3 words of course being my interpretation,

    Someone should ask English the little question of ”if ‘We’ not needing these State Houses pertains solely to those who would cast a vote for National then why the fuck would English be planning on selling off 20% of the States Housing stock to this ‘We’,

    On a related peripheral issue, it appear to me that far from being a highly profitable partly privatized entity showing a near doubling of profitability, Might River Power would give every impression of being ‘Asset Stripped’, with the generators ability to perform in the future being deliberately kneecapped with the running down of maintenance costs on a permanent basis,

    ”One off gains of financial instruments” along with the permanent ‘savings’ being achieved by Mighty River Power are simple code for ”all the cash bearing assets have now been stripped from the company’s books”, and,”permanent savings in maintenance costs” bluntly tells us all that Mighty River Power is being treated in exactly the same manner as AirNZ and Kiwirail were in past decades by the privateers…

    • Draco T Bastard 3.1

      Which is exactly how we on the left said they would be treated. Give it a few years and we’ll be paying out billions to rebuild those assets and the private owners will get windfall profits from that rebuild – the same as Telecom/Spark is expecting windfall profits from the UFB roll-out.

  4. mikesh 4

    Presumably National will be back in power at some time in the future and can flog the rest off, including the remaining 51% of the companies already sold. It’s a war of attrition.

  5. Clemgeopin 5

    Government debt has reached $60 billion, having climbed $27 million a day since John Key became prime minister – and forecasts show it will rise for years to come.

    Treasury figures show net Crown debt reached the highest yet at $60,015,000,000 at the end of September 2013.

    It already equates to 28 per cent of New Zealand’s economic output, is more than $13,000 for every person in New Zealand and is forecast to climb by another $10b by 2017.

    When National took control of the Beehive in 2008, debt was just over $10b.

    So stupidly spending $ 500 million to stupidly sell the energy companies, this stupid government has got back less than 5 billion and has stupidly lost our publicly owned income generating valuable assets.

    If elected back into power, the bastards will be eyeing by hook or by crook, the Kiwi Bank, the ACC, the state houses, the state schools, the state hospitals and anything else that the general public own. I simply don’t trust these right wing cunning selfish greedy rogues. Let us be vigilant and kick them out at this election.

    • fender 5.1

      “When National took control of the Beehive in 2008, debt was just over $10b.”

      “Government debt has reached $60 billion, having climbed $27 million a day since John Key became prime minister – and forecasts show it will rise for years to come.”

      Making voters aware of this HAS to be one of the main messages the opposition gets across leading up to the election. I believe there is a level of confusion out there between debt and the “getting back to surplus” mantra we keep hearing. People with only a mild level of interest in politics don’t really understand the difference and don’t realise how poorly National have managed the economy.

      • Hayden 5.1.1

        It’s not even a question of managing the economy, i.e., whether Labour would have done any better 2008-2014; the sheer number of people who (apparently) believe that National have been paying off a debt run up by Labour really does beggar belief.

    • Draco T Bastard 5.2

      We need to do more than just kick them out. We also need to make it so that our assets can’t be sold without our permission and that requires that a referendum needs to be passed first for each asset.

  6. captain hook 6

    well the government has used the sharefloats as collateral for other borrowing and paying off their mates. You know like when Wellington sold off their pwer company to pay for a caketin so lumpens could run round showing off their big thighs.
    Everything is back to front in New Zealand and nobody gives a shit as long as they have a car an a leaf blower an a horizontal grinder an a chainsaw an a hardly davison an a trip to peru (where the nuts come from) an a fishing boat an you name it.

  7. Draco T Bastard 7

    You have to wonder why the Government is continuing with the share float.

    No I don’t as I know why the government is selling our assets. It’s to turn us back into serfs for the enrichment of the new aristocrats.

  8. Paul 8

    Renationalise.
    No compensation.
    Try Key and his cronies for treason.

  9. Stuart Munro 9

    Yes – it’s time for that bill they’ve been putting off: The State Asset Thief Summary Execution Act. It won’t even get proposed till Labour’s asset thieves are gone from cabinet.

Links to post

Recent Comments

Recent Posts

  • Copper decision a victory for status quo, not Kiwi households
    New Zealanders hoping for cheaper copper broadband will be disappointed by the Commerce Commission’s latest decision in the long running saga to determine the price of copper, Labour’s ICT spokesperson Clare Curran says. “In an apparent attempt to appease everyone,… ...
    15 mins ago
  • It’s time for hard decisions in the Bay
     The Ruataniwha dam project is turning into a huge white elephant as the economics fail to stack up, says Labour’s Water spokesperson Meka Whaitiri.  “Ruataniwha simply doesn’t make economic sense when you look at other major irrigation schemes around the… ...
    2 hours ago
  • More testing won’t lift student achievement
    Hekia Parata’s latest plan to subject school students to even more testing and assessment won’t do anything to lift the educational achievement of the kids who are struggling, Labour’s Education spokesperson Chris Hipkins says. “New Zealand school students are already… ...
    3 hours ago
  • Bad week for NZ economy gets worse
    The bad news for the New Zealand economy got worse this morning with the 8th successive drop in dairy prices at this morning’s global dairy auction, again exposing the absence of any Plan B from the National Government, Labour’s Finance… ...
    5 hours ago
  • System failing to protect women and children from family violence
    Last week we called for mandatory child safety investigations in domestic violence cases. This came after the coronial inquiry into the deaths of Bradley and Ellen Livingstone and the verdict in the trial of the west Auckland boys charged with… ...
    GreensBy Jan Logie MP
    20 hours ago
  • Backers banking on social bonds cash?
    The Government is refusing to say what the $29 million it has set aside for its controversial social bonds programme is for, raising suspicions it is an upfront payment to the project backers, Labour’s Health spokesperson Annette King says. A… ...
    21 hours ago
  • Plastic Free July
    Today is the start of Plastic Free July. Since its inception in Perth, Western Australia four years ago, more and more people and organisations from around the world have joined the call to refuse single use plastic products. Nearly all… ...
    GreensBy Denise Roche MP
    21 hours ago
  • State house sell off Bill gives extraordinary powers
    The Government is about to give Ministers extraordinary powers to take direct personal control of selling state houses, exempting Ministers from normal legal requirements and leaving the sale process wide open for corruption, Labour's Housing spokesperson Phil Twyford says. The… ...
    21 hours ago
  • Cash for charter schools, mould for state schools
    At a time when state schools are struggling in old, cold, mouldy buildings and can barely make ends meet, the National Government is shovelling cash at charter schools which aren’t even spending the funding on kids’ education, Labour’s Education spokesperson… ...
    21 hours ago
  • New Zealand needs a wise response to climate change
    Today in Parliament I got to hear from a group of New Zealanders who are concerned for the future of our country. Called Wise Response, the group is a broad coalition of academics, engineers, lawyers, artists, sportspeople and others who… ...
    GreensBy Russel Norman MP
    21 hours ago
  • No alternative as waste scheme trashed
    Nick Smith must explain how he is going to prevent contamination of New Zealand’s ground and water with liquid and hazardous waste after scrapping the only monitoring scheme and offering no replacement, says Labour’s Environment Spokesperson Megan Woods. “From today,… ...
    23 hours ago
  • Flawed system rates death traps as safe
    ACC Minister Nikki Kaye needs to come clean about what really lies behind the reclassification of 18 vehicles in her new motor vehicle registration system introduced today, Labour’s ACC spokesperson Sue Moroney says. "New Zealanders deserve the truth about the… ...
    1 day ago
  • Tiwai Smelter and 800 workers left in limbo
     Workers at Tiwai smelter and the people of Southland have once again been left in limbo over their future in the ongoing debacle over whether the plant stays open, says Labour’s Leader Andrew Little.  “It’s not good enough that after two years of… ...
    1 day ago
  • New twist in state house sell-off saga
    The Government has opened the door to buyers of state houses simply being landlords and not required to provide social services, Labour’s Housing spokesperson Phil Twyford says. The Prime Minister said at his post-Cabinet press conference buyers would not “have… ...
    1 day ago
  • Government fees will hit charities hard
    National’s decision to ignore the concerns of charities will see the voluntary sector face hundreds of thousands of dollars in new costs if the Policing (Cost Recovery) Amendment Bill passes, says Labour's Community and Voluntary Sector spokesperson Poto Williams. “National’s… ...
    2 days ago
  • Four out of ten for Simon’s Bridges
    The Transport Authority’s decision to fund only four of the 10 bridges promised in National’s shameless Northland by-election bribe is a huge embarrassment for Transport Minister Simon Bridges, Labour’s Transport spokesperson Phil Twyford says. “After one by-election poll showed they… ...
    2 days ago
  • Falling consents adding to Auckland housing woes
    Falling numbers of building consents being issued in Auckland will add to the city’s housing shortfall and fuel skyrocketing house prices, Labour’s Housing spokesperson Phil Twyford “The Productivity Commission found there was a shortfall of around 32,000 houses by the… ...
    2 days ago
  • So Mr English, do you have a plan?
    DIpping confidence about jobs, wages and shrinking exports are highlighting the lack of a plan from the government to diversify the economy and build sustainable growth, Grant Robertson  Labour’s Finance Spokesperson said. " Data released over the last week… ...
    2 days ago
  • Serious risks to tenants and assets in sell-off
    Overseas evidence shows there are serious risks around the Government's plan to sell off state houses to social housing providers, Opposition Leader Andrew Little says. “In the Netherlands – where community housing providers supply the majority of social housing –… ...
    2 days ago
  • Land of milk and money
    Kiwi families are paying over the top prices for their milk and someone is creaming off big profits, says Labour’s Consumer Affairs spokesperson David Shearer. “In 2011 the Government told us high New Zealand milk prices were a natural result… ...
    4 days ago
  • MoBIE largesse doesn’t stop with TVs and hair-straighteners
    The number of MoBIE staff earning more than $150,000 has risen 23 per cent in just a year, Labour’s Economic Development Spokesperson David Clark says. Documents obtained from the Ministry of Business, Innovation and Employment show there are now nearly… ...
    4 days ago
  • English wants to flog state houses to Aussies
    Bill English’s admission that he would sell hundreds of New Zealand’s state houses to the Australians is the latest lurch in the Government’s stumbling, half-baked housing policy, Labour’s housing spokesperson Phil Twyford says. “Bill English should face reality and admit his… ...
    5 days ago
  • Exports continue to fall as Government fails to diversify
    The Government quickly needs a plan to diversify our economy after new figures show that exports are continuing to fall due to the collapse in dairy exports, Labour's Finance Spokesperson Grant Robertson says. “Dairy exports fell 28 per cent compared… ...
    6 days ago
  • Government inaction leads to blurring of roles
    The Treasury wouldn’t have had to warn the Reserve Bank to stick to its core functions if the Government had taken prompt and substantial measures to rein in skyrocketing Auckland house prices, Labour’s Finance spokesperson Grant Robertson says. “The problems… ...
    6 days ago
  • Courthouse closures hitting regions
    The Government’s decision to shut down up to eight regional courthouses, some supposedly only temporarily for seismic reasons, looks unlikely to be reversed, Labour’s Justice spokesperson Jacinda Ardern says.“The move has hit these regions hard, but appears to be a… ...
    6 days ago
  • A Victory for Te Tiriti o Waitangi
    This week my partner, who has a number of professions, was doing an archaeological assessment for a District Council. He showed me the new rules around archaeologists which require them to demonstrate “sufficient skill and competency in relation to Māori… ...
    GreensBy Catherine Delahunty MP
    6 days ago
  • Tough bar set for Ruataniwha dam
     Today’s final decision by the Tukituki Catchment Board of Inquiry is good news for the river and the environment, says Labour’s Water spokesperson Meka Whaitiri. “Setting a strict level of dissolved nitrogen in the catchment’s waters will ensure that the… ...
    7 days ago
  • Minister for Women and National missing the mark – part two
    The Minister for Women was in front of the select committee yesterday answering questions about her plans for women. Some useful context is that we used to have a Pay and Employment Equity Unit within the then Department of Labour… ...
    GreensBy Jan Logie MP
    7 days ago
  • Lavish penthouse spend confirms culture of extravagance
    At the same time thousands of New Zealanders are being locked out of the property market, the Government is spending up on a lavish New York penthouse for its diplomats, Labour’s Foreign Affairs spokesperson David Shearer says. News that taxpayers… ...
    7 days ago
  • Māori Television exodus cause for concern
    The shock departure of yet another leading journalist from the Native Affairs team raises further concern the Board and Chief Executive are dissatisfied with the team’s editorial content, says Labour’s Māori Development spokesperson Nanaia Mahuta. “Annabelle Lee is an experienced… ...
    7 days ago
  • Million-plus car owners to pay too much ACC
    More than a million car owners will pay higher ACC motor vehicle registration than necessary from July, Labour’s ACC spokesperson Sue Moroney says. “During a select committee hearing this morning it was revealed that car owners would have been charged… ...
    7 days ago
  • Bill will restore democracy to local councils
    A new Labour Member’s Bill will restore democracy to local authorities and stop amalgamations being forced on councils. Napier MP Stuart Nash’s Local Government Act 2002 (Greater Local Democracy) Bill will be debated by Parliament after being pulled from the… ...
    1 week ago
  • Minister for Women again misses the mark – part one
    Yesterday I asked the Minister for Women about the government’s poor performance on it’s own target of appointing women to 45% of state board positions. I challenged why she’d put out a media release celebrating progress this year when the… ...
    GreensBy Jan Logie MP
    1 week ago
  • Banks enter Dragon’s Den in pitch for Government’s mental health experi...
    Overseas banks and their preferred providers were asked to pitch their ideas for bankrolling the Government’s social bonds scheme to a Dragon’s Den-style panel, Labour’s Health spokesperson Annette King says. Dragon’s Den was a reality television series where prospective ‘entrepreneurs’… ...
    1 week ago
  • Global Mode bullying won’t stop people accessing content
    It’s disappointing that strong-arm tactics from powerful media companies have meant Global Mode will not get its day in court. Today a settlement was reached terminating the Global Mode service, developed in New Zealand by ByPass Network Services and used… ...
    GreensBy Gareth Hughes MP
    1 week ago
  • More questions – why was the Former National Party President involved wit...
    Today in Parliament Murray  McCully said the reason Michelle Boag was involved in 2011 in the Saudi farm scandal was in her capacity as a member of the New Zealand Middle East Business Council. The problem with that answer is… ...
    1 week ago
  • Minister must explain Maori TV interference
    Te Ururoa Flavell must explain why he told Maori TV staff all complaints about the CEO must come to him – months before he became the Minister responsible for the broadcaster, Labour’s Broadcasting Spokesperson Clare Curran says. “Sources have told… ...
    1 week ago
  • KiwiSaver takes a hammering after the end of kick-start
    National seems hell bent on destroying New Zealand’s saving culture given today’s news that there has been a drop in new enrolments for KiwiSaver, says Labour’s Finance spokesperson Grant Robertson.  “New enrolments for the ANZ Investments KiwiSaver scheme have plunged… ...
    1 week ago
  • Straight answers needed on CYF role
    The Government needs to explain the role that Child, Youth and Family plays in cases where there is evidence that family violence was flagged as a concern, Labour’s Children’s spokesperson Jacinda Arden says. “The fact that CYF is refusing to… ...
    1 week ago
  • Prime Minister confuses his political interests with NZ’s interest
    The Prime Minister’s statement in Parliament yesterday that a Minister who paid a facilitation payment to unlock a free trade agreement would retain his confidence is an abhorrent development in the Saudi sheep scandal, Opposition leader Andrew Little says.  ...
    1 week ago
  • #raisethequota
    Last Saturday was World Refugee Day. I was privileged to spend most of my day with the amazing refugee communities in Auckland. Their stories have been inspiring and reflect the ‘can-do’ Kiwi spirit, even though they come from all different… ...
    GreensBy Denise Roche MP
    1 week ago
  • Dairy conversions causing more pollution than ever, report shows
    The Parliamentary Commissioner for the Environment (PCE) released two reports on freshwater quality and management last Friday. The water quality report shows that dairy conversions are hurting water quality and says that despite great efforts with fencing and planting, large… ...
    GreensBy Catherine Delahunty MP
    1 week ago
  • Employers want urgent action on health and safety
    Moves by National to water down health and safety reforms have been slammed by employers – the very group the Government claims is pushing for change, says Labour’s spokesperson for Labour Relations Iain Lees-Galloway. “The Employers and Manufacturers’ Association has… ...
    1 week ago
  • Labour calls on all parties to end coat-tailing
    Labour MP Iain Lees-Galloway is encouraging all parties to support his Bill to end the coat-tailing provision when it is debated in Parliament this week.  “New Zealanders have sent MPs a clear message. An opinion poll found more than 70… ...
    1 week ago
  • Government social sector reforms
    I’ve written previously about the major shake-up that is happening in the provision of government and community services. Yesterday, the Minister of Social Development spoke publically about what these reforms are likely to look like within MSD. There are major… ...
    GreensBy Jan Logie MP
    1 week ago
  • PM must explain Saudi sheep scandal backflips
    John Key’s explanations of the Saudi sheep scandal continue to be riddled with inconsistencies and irreconcilable backflips, Labour’s Trade Spokesperson David Parker says. “Either he has been misled by his Minister Murray McCully or the Prime Minister is deliberately obfuscating… ...
    1 week ago
  • Independent investigation needed into claims scientists gagged
    Steven Joyce must launch an independent investigation into claims that scientists are being gagged, says Labour’s Science and Innovation spokesperson David Cunliffe. “When 40 percent of scientists say they are being gagged and can’t speak out on issues of public… ...
    1 week ago
  • Swamp kauri mining and exports should stop
    Seeing swamp kauri mining for the first time this week was a shock. Dark peaty soil had been stripped of its plant cover and giant excavators were digging into wet, swampy soil to unearth logs that had been buried for… ...
    GreensBy Eugenie Sage MP
    2 weeks ago
  • MSD going down wasteful spending track
    The Ministry of Social Development is paying big salaries and forking out hundreds of thousands of dollars on management courses while at the same time looking to hand some services over to a multinational outsourcing company with an appalling track… ...
    2 weeks ago
  • South Auckland housing meeting highlights stark realities
    The stark realities of life for South Aucklanders in substandard Housing New Zealand and private rental homes were fully exposed at a South Auckland housing meeting today, Labour’s MP for Manukau East Jenny Salesa says. “Local people generously shared their… ...
    2 weeks ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere