Mackenzie council supports move to sell Alpine Energy shares

Councillors have approved a proposal to sell Mackenzie's shares in lines company Alpine Energy, with a final decision to follow community consultation.

The proposal to divest Mackenzie District Council (MDC)'s 4.96% shareholding was presented by council corporate, commercial and planning general manager Murray Dickson last week.

Dickson's report said the shares had paid no dividend since the 2023/24 financial year, and that selling them would allow the council to invest in new managed funds and pay off existing debt.

MDC chief executive Angela Oosthuizen said the council would need to weigh up the financial impacts of a decision to sell or not.

"We're not getting any dividends. We're probably not going to get any dividends for the next five years. So what's the loss cost of that, versus if we did divest?"

The report also highlighted the decision of neighbouring Timaru District Council in June to sell its 47.5% shareholding, held through Timaru District Holdings Ltd (TDHL), saying Mackenzie could "piggy-back" off that.

"The TDHL sale decision provides an opportunity for MDC to benefit, including increased returns and lessened costs for a sale process."

Dickson said following Timaru's lead would reduce implementation and transition costs.

"[Costs] would be higher proportionately for us if we were on our own rather than piggy-backing on the Timaru District Holdings," he said.

And following Timaru would make the process smoother, streamlining information through a single, robust system, enhancing the delivery of information to the public and reducing duplication, the report said.

"A common process can establish agreed evaluation criteria, reporting, decision points ... [we] would benefit from a shared transaction infrastructure, including valuation works, sale materials, data room, buyer engagement, due diligence and negotiation."

Timaru's large shareholding would also enhance the value of Mackenzie's own shares, the report said, while providing better financial results for the council.

"A larger combined portfolio should make it more practical to diversify across global equities, emerging markets, private equity, real assets, fixed income and cash, rather than each council operating a smaller portfolio."

The council, mayor and councillors had already engaged in discussions with the Timaru council, the report said.

Options for the sale proceeds were discussed at the meeting, with Dickson proposing a recommendation to provide, as part of consultation, information and analysis regarding the funds and debt repayments.

Councillors approved the recommendation to divest the shares, on the basis that community consultation would be undertaken and the council would work with Timaru on a sale process.

They also approved Dickson's recommendation to provide additional debt repayment information.

Oosthuizen said a formal proposal would be brought back to the council following a period of community consultation.