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Govt gives Mighty River investors chance to pull out

Published: 4:31PM Monday April 22, 2013 Source: ONE News

The Government has been forced to issue extra information to investors on the potential risks of buying into Mighty River Power. 

The share float has been temporarily put on hold and investors who have already paid for a slice of the state-owned enterprise can now ask for their money back.

Those are just some of the flow-on effects after Labour and the Greens warned they would put power pricing under government control if they win next year's election.
 
The Government tonight released a disclosure document which outlines the potential risks of a change of government and a change of policy to bring the electricity system under more state control.
 
In doing so, they have also had to suspend the Mighty River Power share offer website until midnight and allow investors who have put money in to get it back if they want.

When the share offer opened last Monday, it was accompanied by a list of potential risks.

And while regulatory reforms were mentioned, a radical Opposition overhaul of the electricity system was not.
 
"If we had known about this a few weeks ago, we would have put it in the original offer document. But Labour and the Greens chose to announce their proposal after the share offer had opened," said Prime Minister John Key.

The Opposition's policy would effectively remove the right of private companies to set power prices.

Labour deputy leader Grant Robertson said Labour has launched this policy "so that consumers are back at the centre of the electricity industry".

But the sharemarket was spooked, with listed energy companies shedding hundreds of millions of dollars last week. 

The Government was left with no option but to act, very much to its annoyance, says ONE News Political Editor Corin Dann.

What are investors warned of?
 
In the new supplementary disclosure document issued, investors are warned that the Opposition announcement increases regulatory uncertainty for Mighty River Power, and any future change in the electricity industry may have an adverse effect on the value of Mighty River Power shares.

Key accepts the new information could be confusing for investors.

However, he would not be drawn on whether the Opposition was trying to spike the sale. 

"No, because at the end of the day I've come to expect the unpredictable from our far left Opposition, and at the end of the day there will be more of it over the course of the next 18 months," Key said.

Labour, however, is unrepentant about the timing of its policy.

"We recognise that it may affect the share price and it's important that people know that. That's why we've been up front, that's why we're 18 months in front of the election saying we are going to make changes to the electricity industry," Robertson said.

Corin Dann says the big question now is what impact the Opposition's plan will have on the final price the Government gets for the shares.

Investors who have already paid for shares and want their money back have five working days, until May 1.
 
People can call 0800 90 30 90 or go to the website, mightyrivershares.govt.nz, which will be back up and running just after midnight.

Dann said it is important to note that this sales process is continuing and that investors still have another couple of weeks to make up their minds on what to do.

He said Mighty River Power will list on the sharemarket on May 10 as planned "but clearly a huge disruption for the Government, a lot of rhetoric being thrown around now at Labour and the Greens with the Prime Minister saying they were the far left."

That is a change and "certainly things have been ramped up" at Parliament, Dann said.

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