KEY POINTS:
Vector chairman Michael Stiassny (left) has been subjected to a relentless pursuit by Vince Siemer (right), who has spent time in jail because of his campaign. Picture / Herald on Sunday
Vince Siemer wouldn't be the first person to have had an unpleasant run-in with Vector chairman Michael Stiassny.
As a prominent receiver, it is not surprising that Stiassny has made all sorts of enemies over the years.
In early 2001, he was appointed receiver to Paragon Oil, a company run by Siemer. The receivership was later revoked.
Receivers aren't generally greeted with open arms by struggling companies, and it is understandable that they develop thick hides.
Nevertheless, Stiassny was not the least bit amused when the Business Herald printed a profile of him several years ago underneath the heading "The Terminator". He is known to hang up on journalists. And he seems to have made plenty of enemies during his time at Vector as well.
The resignation in December 2006 of three highly regarded directors - Greg Muir, John Goulter and Tony Gibbs - and the departure of Vector's chief executive and chief financial officer within months of each other, were all seen as being at least partly due to Stiassny's aggressive style.
But Siemer has taken his dudgeon to a new level, spending time in Mt Eden Prison because of his relentless campaign against Stiassny, which has included publishing allegedly defamatory material about him on the internet.
It has to be said that Siemer has his fingers in all sorts of rather odd pies. According to news reports, the American-born businessman has admitted handing over copies of the police affidavit on the Urewera anti-terror raids to the media, was involved in Union of Fathers pickets outside judges' homes, and has long maintained that Auckland QC Robert Fardell's 2005 death on a North Shore beach was not an accident.
Siemer has been told he will go back to jail unless he removes the Stiassny material from the internet by August 1 and gives an undertaking that it will not be restored.
Last year, he and a press photographer were refused entry to Vector's annual meeting by security guards - a move he described as "corporate thuggery".
Siemer says he has a bachelor's degree in industrial relations and an MBA from Washington University, and that he has run successful companies abroad. He says he simply wanted to ask the directors about Vector's goodwill, debt covenants and foreign currency risks, and claims he has been treated in the same way as Enron's critics were.
Some of his concerns - he is unimpressed with the appointment of Hugh Fletcher and some other Vector directors, for example -- are shared by others in the business world.
"Vector's financial troubles are no small problem, not simply for the investors but also the regional consumers who have seen the company's debt skyrocket over the last few years to a current $3.127 billion - up $46 million from last year despite selling off nominal assets," he fumed last year.
"In order to maintain the dividend payment to shareholders this year, retained earnings went into negative territory. The monopoly utility also has $1.6 billion in goodwill that it has been unable to significantly write down due to its perilous financial position.
"This overall financial scenario is now being used to pressure the regulators into letting Vector charge power consumers more than the Commerce Commission has said they are entitled to do."
Obviously, Siemer has a personal bone to pick with Stiassny. But he is not Vector's only critic. Shareholders Association chairman Bruce Sheppard claimed at the time that it was hardly surprising that the commission had lost patience with Vector.
"Gouging businesses and non-Auckland residential customers makes perfect sense to the combined Auckland Energy Consumer Trust (AECT) and Vector board," he wrote in a newsletter to members. "The reason for this is transparent - only Auckland residents get to vote on the election of trustees, and trustees appoint the board. So the combined Vector AECT structure is a washing machine that redistributes wealth from those who can't vote to those who might garner support for the trustees to continue in existence, milking fees."
But if analysts had any such qualms about Vector a year ago, then most of their concerns appear to have vanished.
The sale of the Wellington lines business, the fact that Vector was able to refinance a large chunk of its debt, and the appointment of a slew of new managers have convinced most of them that the company is sound.
One analyst, who would speak only on condition of anonymity, has been particularly impressed at the dramatic reduction in costs under Simon Mackenzie's watch. "To rip that amount of cost out of the business in a short period of time says a bit about people there beforehand and the people who are there now."
While it is still too early to judge the new management team, "from an operational standpoint you'd have to give [Simon] the tick so far", he says.
Another analyst, who also refused to be named, says he believes the concerns about Vector's debt levels were overstated. "They've added some good management, got a new CFO, some more regulatory people, and I think Simon is building his team very well. He's an excellent operator. So I think they're pretty well positioned for a company that has undergone quite a significant management change in the last 12 months."
The only cloud hanging over the company now is what will happen when the Commerce Commission announces its draft decision on its latest review of electricity pricing in September.
"Even though they've sold the Wellington network, the electricity distribution business that remains still represents well over half of their earnings," notes Matt Henry, an analyst for Goldman Sachs JBWere. "So when you've got a regulatory pricing reset for over half your earnings over the next six months, that's obviously your main focus."
Once that's completed, the regulatory outlook should be a lot more certain and stable than it has been over the past few years, "but in the short term that regulatory question is still an overhang," says Henry.
At least one analyst is predicting Vector will be forced by the Commerce Commission to reduce its prices. Others admit it is anyone's guess what might happen. But few seem to regard its ownership structure as an issue. Vector shares are sufficiently liquid, they say, and they don't believe there will be any change in ownership any time soon.
"The trust has 75 per cent ownership and they expect some influence for that ownership, and that's understandable," says Henry. And its dividend policy is at least transparent, he notes.
Like most blue chips, Vector's share price has been hammered over the past year. But it has noticeably picked up since Mackenzie's appointment, and according to Bloomberg the consensus among analysts is for it to reach $2.34 over the next year.
Says one analyst: "I think it's trading at a very good yield. The dividend is safe and it's a defensive stock, so anything with a defensive aspect to it is a good space to be. I think it's pretty well placed."
