The remaining money won't be due until May 2015 - potentially six months after the next general election. If a person sells their shares during the 18 month instalment period, the buyer becomes responsible for the final payment.
Meridian will make three dividend payments during this 18 month period - at 6 months, 12 months and 18 months.
Retail investors will also have more certainty around the price they pay as the share price for mum and dad investors will be capped.
See a Government issued Question and Answer document here.
More details here too: governmentshareoffers.govt.nz
Unlike the Mighty River Power float there will be no official pre-registration period or share bonus scheme.
There will be a minimum application of $1000 for the first payment in November.
Analysts have said the Meridian float would have to be more attractive than the Mighty River Power which was listed on the stock exchange in May.
Its shares were sold at $2.50 a piece but have languished under the listing price in recent months.
This morning they were trading at $2.22.
Prime Minister John Key said as with Mighty River Power the Government had a number of objectives, including hitting the target of 85 to 90 per cent New Zealand ownership and retaining majority Government control.
Key said the mixed ownership model would result in better, stronger companies for the rigour and transparency that sharemarket listings bring.
Mighty River was a stronger company now as a result of the float.
Finance Minister Bill English said the instalment receipts plan meant investors would require less cash up front when they applied for shares and was being done instead of the loyalty bonus share scheme run during the Mighty River float.
State Owned Enterprises Minister Tony Ryall said a minimum purchase of $1000 worth of shares (60 per cent) was being maintained to encourage widespread take up of the shares.
He said New Zealanders were sufficiently familiar with the process to make the pre-registration phase unnecessary although potential investors could still register their interest online.
Retail syndicate ANZ, ASB and Forsyth Barr will market the offer to New Zealanders.
Ryall said another key difference with the Meridian float was the price cap for retail investors - compared to the fairly standard "bookbuild" used in the Mighty River float.
The price cap, which would be set when the prospectus was issued would provide certainty to retail investors.
"We understand many people like to know the maximum price they'll pay before they buy shares."
Key said the instalment receipt plan was effectively an interest- free loan to retail investors.
It would mean they received a "pretty beefy dividend" on their initial 60 per cent payment for shares.
"It helps the digestion of a larger float", Key said.
He said while it would have been technically feasible to also float Genesis Energy this year but that was now likely to happen early next year.
English said the foregone interest on the 40 per cent second instalment was a cost to the government, but "in the context of the whole float it's a pretty small cost".
He couldn't say which of the Mighty River Power loyalty bonus share scheme or the Meridian instalment receipts plan were of more benefit to investors, "because we don't know the price".
Green Party Co-leader Russel Norman said giving retail investors an 18-month interest-free loan on 40 per cent of the value of the shares "only adds to the cost to the Crown".
"The additional borrowing cost borne by the Crown as a result of this loan to investors will be around $40 million. On top of that, the sale of Meridian will cost tens of millions in fees to brokers, lawyers, and advertisers.
"Continuing the asset sales is just throwing away more public money for no good reason."
Norman said that while a small percentage of New Zealanders would benefit from the plan "the rest of New Zealand will have to foot the bill".
"Kiwis will pay for Mr Key's loan through higher public borrowing, they'll lose half the dividend stream from Meridian to the Crown, and they'll face higher power prices."
Norman said recent polls showed New Zealanders were overwhelmingly opposed to assets sales and there would soon be a referendum on the issue.
"It's not too late for Mr Key to do the sensible thing - stop his asset sales and listen to New Zealanders"
NZ First Leader Winston Peters said the use of instalment receipts for the offer "is yet another admission that the asset sales are a complete failure".
Peters said the shares were not attractive enough on their own, "hence the Government's use of instalment receipts as a sweetener for potential investors".
The plan came hard on the heels of the Government's "market distortion" with the $30 million taxpayer subsidy paid for Tiwai Point.
"The Government used loyalty bonus shares for the sale of Mighty River Power. They are using power subsidies and instalment receipts for the sale of Meridian. What will they think of next?"
