Keep Our Port Public

The Otago Daily Times reports:

The Otago Regional Council has rejected a suggestion Port Otago sell its 15.5% stake in rival Lyttelton Port Company, worth about $35 million, in preferance to borrowing $37.5 million to fund Dunedin’s proposed stadium.

Financial research by brokerage ABN Amro Craigs had suggested Port Otago, 100%-owned by the regional council, could sell its stake to fund the council’s share of the Awatea St stadium funding.

Regional council chairman Stephen Cairns rejected the suggestion when contacted yesterday, saying it “was never an option”.

He reiterated that Port Otago maintained a long-term view to holding the stake, which it bought in 2006.

Port Otago last year received $977,000 in LPC dividends, based on a 6.3c per share payout.

In the past year, the dividend had fallen to 4.2c per share, equating to a $664,000 dividend.

Based on yesterday’s share price, the Port Otago stake in LPC is worth $34.9 million.

The expected return of income through dividends compared with investment is 2.8% – negative, because inflation is almost at 4%, at a time when New Zealand has the highest interest rates in the developed world.

Mr Cairns agreed the investment was “not flash on that basis” but suggested any further comment on the holding should come from the port company.

Port Otago chairman John Gilks was unavailable for comment, but has always maintained the LPC stake was taken with a long-term view.

Tags: Otago Regional Council, Port of Lyttelton, Port of Otago . This entry was posted on Sunday, June 15th, 2008 at 11:15 pm and is filed under In the media. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.