Coming in Contact with charm offensive

Phil Pryke is sure shareholders will see the logic behind his support for the merger deal. Picture / Richard Robinson

Contact shareholders are smart, rational and should support a plan to merge with majority owner Origin Energy, says Contact director Phil Pryke.

Kicking off a charm offensive in Auckland yesterday, Pryke hopes to convince investment fund managers that a merger with Origin is the best way to protect their stakes in New Zealand's second biggest listed company.

Pryke, who has been with Contact since its inception as a state-owned spin-off of the old ECNZ, is not surprised at "some of the debate swirling around" about the merger.

Despite Contact having the widest spread of small shareholders in New Zealand, it is the big investors who will decide whether the plan proceeds.

There are nearly 100,000 Contact shareholders, but 75 per cent of the company is owned by the top 30 - including 52 per cent by Origin.

Pryke has to try to convince them that the risks facing Contact in the next few years are big and serious enough to make the merger attractive.

Shareholders will no doubt hear Pryke often making a point he believes is fundamental to understanding this deal - that the relationship between Origin and Contact shareholders will be changing for the better.

"Here is the really important point - today, Origin corporate controls Contact - let's not pussyfoot around it. Origin corporate controls Contact," he says.

Contact's shareholders, will be "far better off being equivalent to Origin shareholders, rather than being subject to the Origin shareholders".

To those who say Origin should just make a decent takeover offer, Pryke says "it has been made clear to me that a takeover is not on the table".

Origin wanted to keep the influence and potential capital-raising opportunity that came with having 100,000 New Zealand shareholders.

Pryke is confident Contact's shareholders will see the logic behind his support for the merger deal.

"I think shareholders are quite smart, they will understand that managing the long-term value of the assets that underlie these shares is a far better proposition inside the wider pool of assets than it is standing on our own."