ARH In The Gun As Port Debt Levels Spiral
June 3rd, 2009
Auckland Regional Holdings(ARH) is coming under fire for its management of Ports of Auckland (POA) with the port’s debt level spiralling upwards and calls for it to inject capital back into the port. Since 2005, POA’s debt has grown from $146.4m, when ARH bought out the company, to $355.5m in December 2008 which $105.5m must be repaid by December 18 2009. The sum was originally part of its long-term bank loan facility, but the board decided not to roll it over, forcing its need for fresh capital. Liabilities now exceed the value of assets by four to one.
In the four years since it bought the shares in the port it did not already own, ARH has stripped out more than $500m from the former listed company. Speculation has been mounting former port chairman, Gary Judd, was axed from his position because he told ARH the port’s debt problem had been caused by ARH pulling too much money out of the business. Its dividend policy is seen as handicapping the port’s ability to invest in its own facilities.
Aside from injecting capital back into the port company, ARH has also hindered the port raising equity itself by issuing new shares to another investor, because it wants nothing less than 100% ownership of POA. Nor can ARH issue shares itself; it is an investment management business and not a company. But ARH COO, Peter Casey, denies its only option to raise equity is to sell some of its poorly performing investment assets at the worst possible time. He also dismisses claims ARH is not looking after the long term interests of the port “…and we will do what we have to to ensure that it is on a sound financial footing as a long-term provider for the Auckland and national supply chain.”
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