The SOE sell down three years on

• mickysavage
• 7 years ago
• Categories: assets, bill english, business, capitalism, class war, Economy, national, privatisation, Privatisation, same old national, the praiseworthy and the pitiful

In 2014 and 2015 I did very rough and ready calculations on what the sell off of shares in Mighty River Power, Genesis, Meridian and Air New Zealand conducted in 2013 and 2014 had cost us.  The calculations are simple, add up the total dividend payments that are forgone and work out the loss of capital value of the shares that were sold by comparing the sale price with the current market price.  The figures are not good and I reckon some time this year the loss on dividends and increase in value will be greater than the money achieved by the sale.

The results are:

• Meridian paid a total dividend of 18.38c a share.  If the shares had not been sold the dividends that would be paid to the Government would total $230.7 million this year as well as $229 million last year and $163.4 million the year before.
• Mighty River Power (now Mercury NZ Ltd) paid a total dividend of 18c a share.  Forgone dividend was $123.6 million this year, $128 million last year and $91.2 million the year before.
• Genesis Energy paid a total dividend of 16.4c a share.  Net dividend loss is $80 million, compared to last year’s $78 million and $61.9 million the year before.
• Air New Zealand had a really, really good year and paid total dividends of 45c a share.  Dividend loss was $99.6 million.

The total amount of dividends forgone over the three years is $1.366 billion with the amount for 2016 being $533.9 million.

And all of the shares have gone up in value.  My rough calculation is that the shares that were sold are now worth $6.995 billion compared to the Treasury figure of the share proceeds being $4.669 billion, a difference of $2.327 billion.  And the cost of the sales of the shares at $120.6 million should be taken into account.

All up loss so far,  $3.813 billion.

Of course this may all end in tears if the stock market crashes and the sale may then look like it was a good idea.  But by this Government’s rationale and its reputation as a safe pair of hands when it comes to the economy the sale process looks like an unmitigated disaster.  As many of us said it would be.

One interesting aspect of the calculations is how difficult it is to ascertain accurate figures.  My basic calculations (share price times number of shares sold) produced a result of $4.523 billion for the sale of the shares compared to the Crown figure of $4.668 billion.  Currently I cannot work out why this is.

And the proceeds?  Well they have all been spent.  So we are left with no cash, a reduced dividend flow and a bit more than half of the value of the original shares.

National has this reputation of being full of financial geniuses.  Judging by these figures the reputation is not deserved.