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Share sale not needed: Dalziel

NZ NewswireNZ Newswire 23/09/2016 Jonathan Underhill

Christchurch City Council could squeeze capital out of its investment company without having to sell shares but asset sales will still be contemplated, says Mayor Lianne Dalziel.

The mayor was explaining comments she made this week during a mayoral candidate debate that the city could extract cash from its portfolio of investments without selling shares and that "not a single share from any of these companies needs to be sold to balance the books".

Her main opponent, John Minto, is campaigning on a ticket of not selling assets, a position that has gained traction in a city needing to fund its share of rebuilding after the 2010-2011 earthquakes.

It owns an investment company that has paid a total of $474 million in dividends to the council in the past decade, and is projected to return about $1 billion more by 2025 in dividends and through other capital levers that are still to be determined.

"We're not in a state of distress, we're not in a fire sale," Ms Dalziel told BusinessDesk. "I have never committed myself to pledge I will never sell assets but there are other ways to leverage the balance sheet to pull out some cash."

The council adopted a 2015-25 long-term plan in June last year but the document was tagged by Audit New Zealand because of a high level of uncertainty over the value of assets, repair works and the outcome of its insurance claims.

Since then the plan has been amended, cutting $131m from its capital spending, dropping aspirational projects and smoothing the programme, while its "capital release" target for Christchurch City Holdings (CCHL) has been cut to $600m from $750m.

The settlement of its insurance claim and under-delivery of projects meant its opening debt was $201m less than planned, easing its short-term borrowing requirements and allowing the city to dial back increases in rates planned for the next three years. The amended long-term plan passed its audit without being tagged.

The long-term plan classifies CCHL's biggest businesses - Lyttelton Port Co, 89 per cent-owned utility Orion New Zealand and 75 per cent-owned Christchurch International Airport - as strategic assets with a combined value of $1.8 billion that can't be sold without public consultation.

The remaining four that could be sold, Enable Services, City Care, Red Bus and EcoCentral, have a combined value of $252m, although the council abandoned a sale of City Care, its maintenance and construction company valued at $113m, last month after failing to elicit an attractive offer.

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