Fiddling The Books

17 Oct

Media release from ICC……..

EIL withdraws major transaction request

16 October, 2014

The Board of Electricity Invercargill Limited (EIL) has withdrawn its request to Invercargill City Holdings Limited (ICHL) for approval to increase its joint venture interest in OtagoNet, the Chief Executive of Invercargill City Holdings Limited Dean Johnston said today.

The Chairman of EIL, Neil Boniface confirmed the EIL Board had yesterday withdrawn its request to ICHL.

In early September EIL together with The Power Company was successful in purchasing the 51% interest in the OtagoNet joint venture held by Marlborough Lines Limited. EIL initially took an additional 3% stake in the joint venture and had an option to increase its interest to 50%, which required Council’s major transaction approval and the issuance of further uncalled capital.

Council has been consulting on a proposal to issue an additional $100 million of uncalled capital to support the EIL purchase, if required, along with other investment opportunities in alternative energy sources and smart meters. Of this, $30 million is to support potential future investment opportunities such as alternative energy sources and smart meters, as outlined in the proposal document.  

Mr Johnston said the withdrawal of the EIL request meant that Council did not need to consider issuing the full $132 million of uncalled capital. However, it would still meet to consider issuing $32,350,000 of uncalled capital to support the current, approved activities of ICHL and would consider a decision on the $30 million when requested to do so by ICHL.

The Council will hear public submissions on the uncalled capital at an Extraordinary Council Meeting on Monday, October 20 at 4pm and reconvene on Tuesday morning to hear its last submitter.

Council would then hold another Extraordinary Council Meeting to consider its decision on Tuesday, October 21 at 10am, Mr Johnston said.

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9 Responses to “Fiddling The Books”

  1. Philip T October 17, 2014 at 1:23 pm #

    And surprise surprise this board made that decision after the submissions were made public. They obviously thought it would just go through. If council voted the 200 million down it could well have started a chain of events that begun the unravelling of this self serving rubbish.
    The directors are now sitting very exposed to action if they have authorised monies they did not have statuary authority to do. However the shareholders(ratepayers) still cant ask then to act properly and go through due process. They will be scrambling to get the i’s dotted and the t’s crossed right now

    • Kylie October 17, 2014 at 1:41 pm #

      My read on this is that they are trying to ‘distance’ electricity from the uncalled shares so they vote on the decision (and pass it). My thoughts being that they will claim only Holdco directors have a conflict and need to declare. Because it was for an electricity venture they could have been precluded also. By publicly declaring the ‘withdrawal of the request’ they will claim the electricity directors can vote. Given that the shares of Otagonet have already been changed over they will find a way for EIL and subsidiaries to keep the bankers happy. Maybe the ICC dividend is the collateral they needed. I remember Elder (Holdco chair at the time) claiming that the dividend may no longer be possible when the airport upgrade was being ‘forced’ upon them (holdco)

      • Realist October 17, 2014 at 7:27 pm #

        EIL is still part of the Consultation so those 2 are still conflicted, Tim i don’t think is “technically”as regardless the Airport upgrade is going ahead.

        Your other post is more pertinent, an Uncalled capital item before the A&R committee prior to deliberations when some members will be deliberating strikes me as a ploy to try and exert influence on votes.

  2. Ewenme October 22, 2014 at 12:31 pm #

    I might be barking up the wrong tree but I have a horrible little niggling doubt in the back of my mind that the takeover of Rugby Park features somewhere behind closed doors and all the talk of EIL etc is purely a red herring.

    • Realist October 22, 2014 at 2:28 pm #

      Totally the wrong tree, ICC could not snaffle that one without it coming right back to bit them pretty hard, they annual plan stated they would consult with the public at a later stage, if they pull a swifty then the last annual plan document woudl suffice to show they have not followed proper process and would see any such decision rolled.

      • Ewenme October 22, 2014 at 4:50 pm #

        Are you telling me that they always follow the proper process? Our three musketeers on council blew them out of the water at the meeting yesterday with their incorrect procedures so I shall continue to have my doubts about their credibility until proven otherwise!

  3. Ewenme October 22, 2014 at 7:56 pm #

    Talking about proper process – if you look at the agenda tabled at Tuesday morning’s meeting you will observe that the options which appeared in the original document have now been changed. Option 2 and Option 3 are now identical – is it proper process to change wording and alter options on the day of the deliberation meeting? See pages 3 and 4 on the agenda for verification. Does this mean that any decision made on the altered document is legitimate and will whoever authorised the change be held responsible????

    • Realist October 22, 2014 at 9:32 pm #

      No i am not telling you they follow proper process at all, case and point the ICHL matter, which was well and truly raised in submissions.

      Changing the wording diminished the total amount, so in reality a reduced level would not fall foul of any process. Option 2 and 3 are in fact far from identical, 3 gives a commitment to take on more in future where as 2 does not.

      However those 3 options were not the only options available and the document clearly ruled something out as an option without giving good reason why, that option in fact was a very real option that hadn’t been put to councillors.

      The other matters being public comments about current process for investing in forests that did not feature in the consultation document.

      I wouldn’t say the three musketeers blew them out of the water, I would say those individuals actually took a stand for due process and the information put before them, and from that knew full well that the process was flawed, borne out by an apology from DJ and further by their LG Lawyer stating clearly that the risk of proceeding was less than negligible.

      • Ewenme October 24, 2014 at 9:02 am #

        Apologies Realist! You are of course correct – one word has been changed between the options – in 2 “It is NOT willing” and 3 “It IS willing”.

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