NZ Post to sell 45 percent of Kiwibank
New Zealand Post has received an indicative offer from the New Zealand Super Fund and ACC to buy 45 percent of Kiwibank.
New Zealand Post Group chairman Sir Michael Cullen made the announcement this morning.
No deal has been finalised yet, with the offer "subject to a number of matters including due diligence".
"[The offer] has been priced on a commercial basis, and reflects the Government's absolute position that Kiwibank must remain in public ownership," NZ Post said in a statement.
The offer is based on the $1.1 billion value of NZ Post's owner Kiwi Group Holdings, meaning NZ Post would receive $495 million.
"New Zealand Post approached the Government and pursued the initiative because it considers that NZ Super Fund and ACC are strong potential shareholders for Kiwibank as a Crown-owned bank," says Sir Michael.
"The two investment funds hold assets of over $60 billion between them, while NZ Post continues to face headwinds in its core mail business."
Sir Michael says while the deal hasn't been signed, sealed or delivered yet, the company wanted to be proactive in announcing it.
He believes the agreement would secure the long-term future of Kiwibank, and it is time to broaden the bank's support within the wider public sector.
Sir Michael wanted to make clear that the proposed sale "is not some move to partial privatisation".
He hopes it can be completed before the end of the current financial year. Though if it doesn't go through, Sir Michael says it won't leave Kiwibank in dire straits.
"Kiwibank is not in distress at all; it will be much more constrained about its capacity to grow."
Sir Michael also had a word of warning for those thinking about taking their money out of Kiwibank.
"I should emphasise before anybody rushes to get their money out of Kiwibank, Kiwibank is an extremely sound bank. I have all my liquid assets in Kiwibank, other than my house and my car -- the only other major assets I have. I'm a very nervous, insecure, elderly investor and I'm not going to be withdrawing a single dollar.
"None of the Australian banks have a guarantee of that sort at all."
He admits the post side of the business is struggling, and the proceeds from the deal will help it invest in its core parcels and packages business and to pay down debt.
It is also anticipated a special dividend would be paid to the Crown.
Neither ACC or the Super Fund will be able to sell shares outside the existing shareholder base for five years.
Should problems come out of due diligence, the deal may need to be renegotiated in terms of price or other terms or the agreement could not go ahead.
NZ Post initially discussed the proposal with the two Crown-owned enterprises and approached the Government for permission to explore the idea in 2014. Active discussions were started by NZ Post early last year.
State-Owned Enterprises Minister Todd McClay says while the proposal could benefit the parties involved, it still needs to "stack up" before it goes ahead.