RAW DATA: Govt statement - Meridian Energy share offer details confirmed

The Government today confirmed it would use instalment receipts in the Meridian Energy share offer – allowing investors to pay for their shares in two instalments.

Subject to market conditions, the sale of up to 49 per cent of Meridian is expected to be completed, and the company listed on the sharemarket, by early November, Finance Minister Bill English and State-Owned Enterprises Minister Tony Ryall say.

“Listing up to 49 per cent of Meridian on the sharemarket will give New Zealanders an opportunity to invest in another big Kiwi company at a time when many people recognise the value of diversifying their growing savings away from property and bank deposits,” Mr English says.

The instalment receipts, which are fairly common for major initial public offerings in other countries, will mean New Zealand retail investors will need to pay less cash up front when they apply to buy shares. Instalment receipts were used by the Government in the float of Capital Properties in 1998.

“They will allow New Zealanders to pay for their shares in two instalments,” Mr English says. “The first instalment, for around 60 per cent of the share price, will be paid when investors apply for shares.

“The remaining amount, which will be fixed at the end of the share offer, will not need to be paid for a further 18 months.”

Between the first and second instalments, investors will receive the full dividends paid out in that period, which will make the dividend yield – or return on their investment – higher in those first 18 months.

Ministers have decided to use the instalment receipts as an incentive for New Zealand investors in Meridian, instead of the loyalty bonus shares that were used in the previous Mighty River Power share offer.

Mr Ryall says ministers have also confirmed the following decisions for the Meridian share offer:

• A minimum application of $1,000 will apply for the first instalment of shares.
• Given there is sufficient public familiarity with the Government's share offer programme, there will not be a formal pre-registration process, as happened with the Mighty River Power offer.
• Retail banks ASB and ANZ and sharebroker Forsyth Barr have been appointed to the retail syndicate for the Meridian offer. The syndicate will work closely with joint lead managers Craigs Investment Partners / Deutsche Bank, Goldman Sachs /JB Were and Macquarie to market the offer to New Zealanders.
• “Another difference with the Meridian offer is that we have decided to set a share price cap for New Zealand retail investors who take part in the offer,” Mr Ryall says.

“We understand that people like to know the maximum price they’ll be paying at the time they apply to buy their shares.

“Therefore, the cap will be set at the same time that we set the price range, and it will be announced when we lodge the offer document. This will give retail investors more certainty when they apply for shares.

“It also means that if demand is such that institutions are bidding at higher prices than our price cap, then retail investors will get their shares at a lower price than that paid by the institutions.”

Information about the Meridian offer, including how instalment receipts work, is available for New Zealanders on the Government Share Offers website (www.governmentshareoffers.govt.nz). The offer document will provide prospective investors with all of the information they need about Meridian and the offer structure.