Ports of Auckland, New Zealand's biggest container port, is getting an infusion of funds from its shareholder, the region's investment company, of as much as $70 million, allowing it to repay debt and strengthen its balance sheet as earnings slide.
The port has issued 50 million $1 shares to Auckland Regional Holdings and taken a loan from ARH for $20 million, the company said in a statement. Of the 50 million shares, the port has called 40 million and received the cash on September 4, it said.
The recapitalisation follows a strategic review by the port, which is currently in talks with its banks to renegotiate its facilities. The port's finances have also been bolstered by the $40 million sale of Queens Wharf last month, with an accounting gain of $20 million to be recorded in its 2010 accounts.
The recapitalisation "puts in place an appropriate capital structure for these challenging times," said Peter Casey, ARH's chief operating officer. "Many companies have been doing similar things" this year, he said.
The fresh funding is likely to stoke criticism that Ports of Auckland relies on the region's ratepayers to prop up its finances while rivals such as publicly listed Port of Tauranga must manage its balance sheet in the full glare of the NZX's disclosure rules.
ARH, which answers to the Auckland Regional Council, has over $1 billion of assets, and can fund the new capital to the port company from its own means, Casey said. Ports of Auckland's net debt stood at $348 million at June 30, down from $355 million a year earlier.
The port's annual net profit tumbled to $5.4 million from a year-earlier $21.1 million, with about $10 million of the decline made up of write-downs on investment property and its Northland Port Corp. shares to comply with international financial reporting standards.
Excluding the adjustments, normalised earnings fell to $15.7 million from $22.3 million. Revenue from port operations fell 3.5 per cent to $163 million.
-BUSINESSWIRE
See the Ports of Auckland press statement here
