KEY POINTS:
Port Otago - which holds a 15 per cent stake, worth almost $40 million, in listed rival Lyttelton Port - is tipped to lead changes which could see a merger between the South Island operators.
Port Otago chairman John Gilks has rejected reports this week there had been
working committee talks between the ports.
He said Port Otago's board members had not had talks with LPC counterparts. Port Otago's management was not authorised to enter into merger discussions, but they had held meetings with their Lyttelton counterparts.
When pressed about initiating any preliminary talks, Gilks would only say Port Otago remained comfortable with its LPC stake and would maybe make the first move.
The environment was right for talks to start, he said.
Port Otago has repeatedly fought off Lyttelton to retain its ship calls, scoring a coup in October 2002 by securing the P&O east round-the-world service ahead of LPC.
In December 2005, it secured the preferred South Island port status for the replacement pendulum service to Europe and the US via the Panama Canal and return, following the $4.1 billion Maersk and P&O merger.
A report by broker ABN Amro Craig said it expected Port Otago to be at the forefront of change, given the strength of its operations and strategic stake in LPC.
Port Otago's blocking stake was taken at a time when LPC, owned by the Christchurch City Council, wanted to promote a takeover and delist, so a sale could be made to a Hong Kong port management company, a plan widely criticised in Christchurch at the time.
The raid has since netted it more than $1 million in LPC dividends.
ABN investment adviser Peter McIntyre said the respective ports' return on capital had not been high and the companies could achieve better value for their assets.
Port Otago is 100 per cent owned by the Otago Regional Council and has delivered $44.5 million in dividends since 1988.
LPC is a listed company, owned 75 per cent by the Christchurch City Council, via a subsidiary, 15.5 per cent is held by Port Otago and about 10 per is in public hands.
The concept of port rationalisation around the country has been simmering for more than three years.
The ports of Auckland and Tauranga have considered and then rejected a merger scenario which could have given some guidance to other port companies.
