Major investment . . . Alpine Energy's purpose-built headquarters in Washdyke. PHOTO: COURIER FILES

by Claire Allison

The Timaru District Council is seeking public input on plans to sell off its 47.5% shareholding in lines company Alpine Energy.

The council’s holding company, Timaru District Holdings, also owns a 50% shareholding in PrimePort Timaru, a portfolio of investment properties around the port, and other land and buildings in Timaru.

Timaru mayor and holding company chairman Damon Odey said they had received professional advice that the Alpine Energy shareholding was worth at least $110million, and the council believed the community would benefit more from that money if some of it was used to repay debt, and the remainder was invested in other growth assets.

The council proposes to use part of the sale price to repay $22.1million of external council debt, which would also reduce interest costs by $1.1million per year, and put the balance – about $88million – into a range of income-earning investments.

The council has about $90million to $100million in debt, which is forecast to peak at about $140million within the next 10 years.

Mr Odey said both the council and the holding company were confident they would receive at least the equivalent of the current $4.7million annual dividend received from the Alpine investment, from a combination of savings from interest costs on debt, and returns on prudent investment of the remaining funds.

Mr Odey said the Alpine investment – vested in the council following electricity reforms in the 1980s and ’90s – had disadvantages in that the company operated in a highly-regulated market, it was in a single geographic area, and the holding company had the right to appoint only two of the five directors, so had limited ability to influence Alpine decisions.

The other Alpine Energy shareholders are Line Trust South Canterbury (40%), the Waimate District Council (7.54%) and Mackenzie District Council (4.96%).

The holding company receives an annual dividend from Alpine of about $4.7million, and, from all of its investments, returns between $2.75million and $2.85million per year to the council, which is used to offset rates.

Mr Odey said he wanted to reassure people the council did not need to sell.

“We’re not in the crap. We’re not flogging stuff out the back door.

“If the market doesn’t come up to where we have made our analysis, then see you later. We won’t get out of bed for a cheeky offer.

“We don’t need to sell, and we won’t sell unless it’s on our terms, and my vision is that $88million will never be dissolved .. and could become $150million in a decade.”

Mr Odey said the council was aware of the impact increasing rates had on an ageing ratepayer base.

While some inter-generational loans were appropriate, he said the model of continuing to increase rates and borrow money did not stack up.

“We believe we will generate the same, if not a higher, return than that whole asset does now.”

The significance of the proposed sale triggers an amendment to the council’s 2018-28 long term plan, and the council is required to consult the community.

“We’re putting it to the community and saying, ‘here is our assessment, tell us what you think’.”

Submissions on the council’s proposal open today and close on December10.

A council hearing, if required, is scheduled for December18, and the council expects to make a final decision by Christmas.latest Nike releasenike fashion