MEL - Meridian Energy

[Joshuatree]

Out of respect for those that have (for reasons best known to themselves) decided to invest in this company I won't comment further in this thread.[/QUOTE]

We are all addicted to something eh Rog:)

[Joshuatree]

You paint a broad brush Snoopy.Ther are always exceptional circumstances and im sorry to see you using the example re the sickness beneficiary who died( i will take your word on that). So many issues there. Of course people die in casinos just like any where else, prob a few heart attacks .

The greens and labour will get your vote too if you believe what you say in your isolating way, well done.Im considering it too.

"There is no advantage long term for a casino to cajole more money out of a customer then they can afford to lose" You are trying to be funny i take it. Thats how they make their money Snoopy. Many people cant afford to lose it, they are desperately seeking away to pay off their credit cards their loan shark , their debts , bills, rent etc. Some know the odds are stacked against them but it doesn't stop their addiction. Heard of Gamblers Anonymous? When one is in a hole one does desperate things.

I know of a guy who blows most of his money at casinos. His parents live in an impoverished country but they send any paltry savings to their son in nz to make a better life for himself and maybe them later. he gets more and more desperate daily and tells them porkies re his restaurant is getting better and better and good times are just around the corner. He is just a chef not a business owner..

Biker. Winners and Losers eh , Black and White; yeah... right. Wisdom and compassion comes with seeing the many shades of gray.

Roger You're right ,the Brokers are the winners:)


One could invest in Rothmans and say "Hey nobody is making that person suck on a gasper".... Remember when they sponsored sports:t_up: . Whos got a familiar sitting out in the porch having a ciggy right now? They are rational and sensible and informed yet have re one chance in 2 of dying from it let alone the poor health. Some gamble. Many orgs trying to help them and many money making orgs as well.

You could also invest in a weapons company and say 'hey i didnt pull the trigger".

Ethics and morals and making money mmmhhhh.

[RTM]

Yes....its amazing how we can justify our decisions when money or self interest is at stake........But interesting twist to turn it around on the power co's just the same.

[RTM]

Yes....its amazing how we can justify our decisions when money or self interest is at stake........But interesting twist to turn it around on the power co's just the same.

[False Profit]

We heard you the first time but some things are worth saying twice ;)

[Bjauck]

Ethics and morals and making money mmmhhhh.

It is all part of a sliding scale and your own opinion. You could choose not to invest in Grumman, BAe et al. because they make arms, SKC because of gambling, BAT because of cancer, MOA because of drunkeness. Don't forget Cadburys/Kraft because of high fat, sugar and diabetes. Then you have car and plane manufacturers and oil companies and the consequences of pollution and global warming....etc.etc. Just where does one draw the line in the shifting sands? Do we also need warning notices on kitchen knives advising that they can cause death?

[Snoopy]

You paint a broad brush Snoopy. There are always exceptional circumstances and i'm sorry to see you using the example re the sickness beneficiary who died (i will take your word on that). So many issues there. Of course people die in casinos just like any where else, prob a few heart attacks.


For Meridian Joshuatree, there is nothing 'exceptional' about charging very high prices relative to the cost of generation. They do it every day to every customer.



"There is no advantage long term for a casino to cajole more money out of a customer then they can afford to lose"
You are trying to be funny i take it. That's how they make their money Snoopy.


Having a business model based on emptying someone else's bank account is not sustainable Joshuatree. Once you take all someones money they are no longer a viable customer. How could any business survive on that kind of strategy?



Many people cant afford to lose it, they are desperately seeking away to pay off their credit cards their loan shark , their debts , bills, rent etc. Some know the odds are stacked against them but it doesn't stop their addiction. Heard of Gamblers Anonymous? When one is in a hole one does desperate things.


If your argument is that all gambling should be banned then, well I accept the integrity of your position. However, if you accept that gambling is legal and for some people at least a little flutter counts as entertainment, then the argument shifts as to how gambling in NZ should be administered.

Sky City has a program where problem gamblers can ban themselves and have it enforced by Sky City security. Sky City train their staff to watch for the signs of problem gamblers. There are now electronic aids on the pokies at Sky City, a pacific first I believe, so that customer have a visual record of how much they have fed into a given machine. I mean, short of providing a staff member to hold every customers hand, what more would you expect Sky City to do? I accept that there will always be problem gamblers that slip through the cracks. But surely the worst cracks are those uncontrolled pokie machines in pubs and clubs, the completely uncontrolled horse racing industry or dare I say it those lotto outlets accepting the last $20 that should have gone towards the power bill?

I believe there is a sinking lid policy on pokies in Auckland. So you may find that when the expanded casino is finished, you have less overall pokies in Auckland and more of those under the control of a responsible host like Sky City. Short of banning all casinos and pokies I know, but is this not a move in the right direction?



I know of a guy who blows most of his money at casinos. His parents live in an impoverished country but they send any paltry savings to their son in nz to make a better life for himself and maybe them later. he gets more and more desperate daily and tells them porkies re his restaurant is getting better and better and good times are just around the corner. He is just a chef not a business owner..


That just shows the foolishness of the parents don't you think? Sending a young person to a foreign country where they may be socially isolated? What sort of behaviour do they expect?



One could invest in Rothmans and say "Hey nobody is making that person suck on a gasper".... Remember when they sponsored sports:t_up: . Whos got a familiar sitting out in the porch having a ciggy right now? They are rational and sensible and informed yet have re one chance in 2 of dying from it let alone the poor health.


Not a fair comparison. Tobacco is both mentally and physically addictive. Gambling is not. Every cigarette has a negative consequence. Every bet does not.

SNOOPY

[Stranger_Danger]

I am not sure sure Meridian or any of the power companies are necessarily 'ethical' or 'moral'. Remember the sickness beneficiary in Auckland who died because her power,and hence oxygen machine were switched off? And what about the poor who freeze in their houses in winter and the accompanying sicknesses that result all because the greedy power companies charge so much for power, that in Meridian's case has no fuel cost?

However, something like a casino is entirely voluntary to enter. And SKC for example,have people and procedures to deal with problem gamblers. What other form of gambling can you say that about? There is no advantage long term for a casino to cajoule more money out of a customer then they can afford to lose. As far as I am aware, no-one has died on a casino floor at any Sky City establishment.

SNOOPY

That is a pretty rose tinted glasses view.

Talk to anyone dealing with suicides, and they'll count gambling addicts amongst their numbers.

I have never heard of anyone topping themselves over a power bill.

[blackcap]

That is a pretty rose tinted glasses view.

Talk to anyone dealing with suicides, and they'll count gambling addicts amongst their numbers.

I have never heard of anyone topping themselves over a power bill.

So you would ban all gambling? TAB, LOTTO, KENO etc? The point Snoopy was making was that its not SKC that is the problem. It is the way gambling is administered. Pokies in pubs or places unregulated to a lot more damage than sky city.

[QOH]

Gee they have already taken the money out of my account to pay for Meridian shares, I wasn't expecting it to be taken out until next Thursday. Perhaps they are worried people will change their mind.

[blackcap]

Gee they have already taken the money out of my account to pay for Meridian shares, I wasn't expecting it to be taken out until next Thursday. Perhaps they are worried people will change their mind.
Yep called my broker about that and they said they would take it out at first opportunity. Didn't bother me though as I didnt want that amount sitting there tempting, tempting me continually. But they are quick on the ball.

[Snoopy]

That is a pretty rose tinted glasses view.

Talk to anyone dealing with suicides, and they'll count gambling addicts amongst their numbers.

I have never heard of anyone topping themselves over a power bill.


I in no way wish to diminish the issue of suicide. Suicide is an absolute tragedy at a personal level that rises above any financial argument. I just don't think that closing down all casinos will 'solve' suicide.

Maybe people don't top themselves over a power bill. But the vulnerable can still freeze and disease to death in a cold house.

SNOOPY

[Joshuatree]

Back to Meridian.Sounds like there has been a very strong take-up of Brokers allocations and public pool int. Some have completely allocated all shares. Just heard this a few minutes ago.

[sharer]

I wonder what effect the MRP sudden buyback is having on late decisions to invest in Meridian, and the expected final MEL price.
Much has been said, but are there any factual reports available yet?
See that near the close MRP has fallen back to 220, as before their buyback announcement.

[percy]

Yep called my broker about that and they said they would take it out at first opportunity. Didn't bother me though as I didnt want that amount sitting there tempting, tempting me continually. But they are quick on the ball.

According to my broker at Craigs, our money goes out of our cash management accounts next Wednesday night.

[QOH]

According to my broker at Craigs, our money goes out of our cash management accounts next Wednesday night.
I paid for mine by direct debit, but through my broker, thought I'd have until next Wed/Thurs before it was taken out. They will have had my money for 3 weeks by the time they are listed, will be annoyed if I'm scaled back.

[RTM]

Maybe the buy back has to happen first to see the share price promoted ? Until then...nothing has changed.

[Beagle]

Out of respect for those that have (for reasons best known to themselves) decided to invest in this company I won't comment further in this thread.

We are all addicted to something eh Rog:)[/QUOTE]

LOL, its hard to resist having a good vigirous debate isn't it :)
It'll be interesting to see if all the "talk" of strong demand actually pans out or is that just another aspect to the "sales pitch".

[mouse]

Comment from Joshuatree.
I know of a guy who blows most of his money at casinos. His parents live in an impoverished country but they send any paltry savings to their son in nz to make a better life for himself and maybe them later. he gets more and more desperate daily and tells them porkies re his restaurant is getting better and better and good times are just around the corner. He is just a chef not a business owner..

This is a major, major problem with Chinese and maybe other Asians too. My Amah in Hong Kong was a beautiful lady whom I tried to teach to drive. She was married with two beautiful girls. My wife and I used to take them out with us on trips to the New Territories. She never gambled, although everyone else did. Ah Jern told me her brother gambled away the family cow when her parents died. Real poverty, so she came over to Hong Kong. That is the truth behind gambling. It destroys lives and families. Plus, as a security chap for the Christchurch Casino told me, anyone frequently gambling at ten in the morning is a problem gambler.

[Joshuatree]

Snapiti , Rog . CRAIGS have no more to offer you guys, sorry about that their firm allocations have been cleaned out.. Youll have to apply to the public pool if you hurry but you will likely be scaled. Definned , beheaded fried, sushimied , creamed ,rogered ,depending on what sorta cool cat fin fish you are:cool:

[Joshuatree]

Thanks for sharing mouse.

[Sideshow Bob]

Snapiti , Rog . CRAIGS have no more to offer you guys, sorry about that their firm allocations have been cleaned out.. Youll have to apply to the public pool if you hurry but you will likely be scaled. Definned , beheaded fried, sushimied , creamed ,rogered ,depending on what sorta cool cat fin fish you are:cool:

Yes have heard this also, with likely scaling through the public pool.

[macduffy]

Not all privatisation IPO's are flops.

http://www.theguardian.com/uk-news/2013/oct/11/royal-mail-share-price-buyers-profit

[mouse]

Thanks for sharing mouse.

Pleasure. It is life and pretty depressing.

[biker]

...........Biker. Winners and Losers eh , Black and White; yeah... right. Wisdom and compassion comes with seeing the many shades of gray.........

.

I never mentioned winners. Only losers. Nothing gray, shaded or otherwise, about that. Given enough time and enough visits, everyone will leave a loser. Casinos are pure and simply designed to achieve that.
And they do.
And thats how SKC makes its money.
Wisdom and compassion? Interesting that these would be two qualities SKC would prefer not to be present in their Casinos or their Board Room.They tend to be counterproductive to gambling profits.

IMHO

Disc. No shares in SKC. Quite a few in Meridian. So I'm biased.

[Joshuatree]

Cheers biker

[Xerof]

Yes have heard this also, with likely scaling through the public pool.

If there is to be scaling to be done, the public pool will, IMO, be scaled the least as that is the 'mum and dad' sector they are so keen to have holding. The 'Firm allocation' pool, which has largely gone to 'seasoned investors', (and I understand it totalled 45% of the IPO), can be scaled to a maximum of 20%. This is likely to happen, as it carries the highest brokerage rate (from a cynical broker I deal with) This leaves the book builder insto's and 15% for offshore. IMO, these should be scaled the most, as if they want support for the price post-IPO, these are the guys who will do it.

[CJ]

me thinks if there is scaling they will say scaling will be done on alloments of over 2000 shares only or something similar.Agree. For MRP, they only scaled above $15,000. Small investors will get all they want.

[Joshuatree]

It is all part of a sliding scale and your own opinion. You could choose not to invest in Grumman, BAe et al. because they make arms, SKC because of gambling, BAT because of cancer, MOA because of drunkeness. Don't forget Cadburys/Kraft because of high fat, sugar and diabetes. Then you have car and plane manufacturers and oil companies and the consequences of pollution and global warming....etc.etc. Just where does one draw the line in the shifting sands? Do we also need warning notices on kitchen knives advising that they can cause death?

Bjauck a good point re where do you draw the line? The important thing imo is to HAVE your boundaries, lines; and not pretend ignorance in worship of the $.We come to our own conclusions based on what we know and who we know who has suffered. I wouldn't say shifting sands(obliterating ones line/s). Life is constant change and we must adapt but we know for ex ; what a cigarette does for to peoples health; thats a line of truth. We know many people gamble not with surplus/ discretionary funds and they and people around them suffer. Snoopy believes people suffer with too high electricity charges from Meridian thats ok ;its his personal belief, line. As long as one has ones Lines (ethics and morals, personal beliefs, wellbeing to people etc) one can live with oneself with a little more authenticity and compassion..

[CJ]

Given it is Sunday, the perfect place for you guys to discuss ethics and morality would be church. Unless your discussion is in relation to whether a non monopolistic company that provides a 1st world necessity should maximise it profits, I suggest you use another thread.

[Joshuatree]

Is that because you don't go to church CJ?;) I don't either but i wouldnt ever consider boxing up ethics and morals into just Religion. But yes another thread would be pertinent, cheers .

[BlackCross]

Seems that the American crisis is getting worse and negotiations between the White House and Republicans over the budget have broken down, leading Deutsche Bank executives to say markets will be down Sunday evening, when Asian markets open (if politicians don’t reach an agreement by then).
So, if markets do fall substantially this week is it possible for those already having applied to cancel their order?

[CJ]

Seems that the American crisis is getting worse and negotiations between the White House and Republicans over the budget have broken down, leading Deutsche Bank executives to say markets will be down Sunday evening, when Asian markets open (if politicians don’t reach an agreement by then).
So, if markets do fall substantially this week is it possible for those already having applied to cancel their order?my guess is you can't cancel unless something mentioned in the prospectus changes.

[Xerof]

CJ, your guess is better than that, it's correct

[mouse]

CJ, your guess is better than that, it's correct

Maybe we should go to Church and pray!

[macduffy]

CJ, your guess is better than that, it's correct

But see also p171 of the Offer Document - " Discretion regarding the offer"

"The Crown reserves the right to withdraw the Offer at any time prior to the allotment of Instalment Receipts to Applicants."

All one sided - discretion only on the seller's part!

[CJ]

But see also p171 of the Offer Document - " Discretion regarding the offer"

"The Crown reserves the right to withdraw the Offer at any time prior to the allotment of Instalment Receipts to Applicants."That is for their benefit, not ours. We cant withdraw our money but if they dont/cant raise enough, they can pull it. Having said that, politics are involved.

[Arbroath]

Sounds like the Yanks will do a deal at the last minute to sort things out as usual. Anyone got thoughts on the likely price set here - I'm going with $1.60

[CJ]

I don't see it being below $1.60 unless there is no scaling at all of retail buyers. I'll pick $1.70 and very little retail or broker scaling.

Small incentive for retail holders to retain

[CJ]

"I don't see it being below $1.60 unless there is no scaling at all of retail buyers."

CJ

are you expecting this to be the starting day one bid?I am refer to the price of the share, not the instalment receipt so a price of $1.70 means retails investors who hold from IPO only have to pay 60c for the second installment but everyone else has to pay 70c.

I have no idea what that means for opening price for the installment receipts. In theory, at $1.70, anything above 90c is a profit for retail investors who hold on the 18 months (have I got this right?).

[percy]

I am refer to the price of the share, not the instalment receipt so a price of $1.70 means retails investors who hold from IPO only have to pay 60c for the second installment but everyone else has to pay 70c.

I have no idea what that means for opening price for the installment receipts. In theory, at $1.70, anything above 90c is a profit for retail investors who hold on the 18 months (have I got this right?).

I think you have it right.

[blackcap]

CJ, percy

So even if you buy on the open market you get two dividends before you have to pay for the full share value.

This provides a discount on the share for 12 months.

It should provide an incentive for demand to continue for the share after IPO putting a floor under the bid?

I don't think so surfersteve.

[CJ]

CJ, percy

So even if you buy on the open market you get two dividends before you have to pay for the full share value.

This provides a discount on the share for 12 months.Yes. The second installment is due on the same day regardless of if you buy at IPO or on market. However, on a DCF type valuation, the benefit of the higher dividends for the first 12m should be built into the price of the installment.

[CJ]

Surfer - Really need to see what the issue price is, and the level of scaling, to make a call on the price it hits on the first day.

I have bought in so dont expect the IR to go below $1 and definitely not to drop more than the amount of the retail discount.

[blackcap]

Hi Surfersteve,

Sorry been away for a while. No I do not expect the price to be under $1 on day one. In fact I have bought to stag it. But I do not think it is the fact we get so called "high dividends" on the installment receipts that will be the driver for demand. What installment reciept holders conveniently forget is that they have borrowed the installment amount at an implied rate of interest.

[Hoop]

Hi Surfersteve,

Sorry been away for a while. No I do not expect the price to be under $1 on day one. In fact I have bought to stag it. But I do not think it is the fact we get so called "high dividends" on the installment receipts that will be the driver for demand. What installment reciept holders conveniently forget is that they have borrowed the installment amount at an implied rate of interest.

Ditto...........

[CJ]

Surfer - just simple time value of money. If you know what a share is worth, but dont have to paid the second installment for a year, you are willing to spend more on the first instalment as the rest of the money can sit in the bank earning interest.

[percy]

Surfersteve.
I don't know what Meridian will list at.
I had $30,000 sitting in the bank earning me 4%.Rainny day fund.
Put $10,000 into ZEL as I thought their dividend would exceed 4%.Did not expect them to trade at 14% above issue price.
Meridian, I and my wife are buying $10,000 each.Again I am trying to beat the bank 4%. The huge initial dividends will greatly exceed the bank's 4%.On going dividends of 7% should mean there is upside to the share price.The 18 months before final instalment means I have control of $30,000 or more of Meridian shares for putting up only $20,000.In the meantime I can use that $10,000 for other investments.[Maybe more HNZ?]lol.
Both ZEL and MER are being brought with the idea of never selling.

[Beagle]

The American situation is a genuine concern.
Most investors are expected to mail their applications either today or well before not knowing the outcome of these proceedings which look increasingly unlikely to be resolved by Thursday.
On the other hand institutions have the luxury of not having to express their interest until early next week in the book-build, (which would appear to possibly confer a material advantage as they may know one way or the other whether the American situation has been resolved by then), and on the other hand the Govt reserve the right to cancel the float, (investors cannot cancel their subscription), if they're not happy with its outcome, read a meltdown in the markets due to a collapse in the American negotiations.

Seems to me retail investors are at something of a disadvantage.

[Balance]

The American situation is a genuine concern.
Most investors are expected to mail their applications either today or well before not knowing the outcome of these proceedings which look increasingly unlikely to be resolved by Thursday.
On the other hand institutions have the luxury of not having to express their interest until early next week in the book-build, (which would appear to possibly confer a material advantage as they may know one way or the other whether the American situation has been resolved by then), and on the other hand the Govt reserve the right to cancel the float, (investors cannot cancel their subscription), if they're not happy with its outcome, read a meltdown in the markets due to a collapse in the American negotiations.

Seems to me retail investors are at something of a disadvantage.

Retail investors WILL always be at a disadvantage.

[Food4Thought]

Debt deal sorted (for now) so hopefully that will put peoples minds at ease....

http://www.marketwatch.com/story/congress-races-to-finish-fiscal-deal-2013-10-16

Thanks Tumeric! Great news, just what I wanted to read this morning.

[percy]

Debt deal sorted (for now) so hopefully that will put peoples minds at ease....

http://www.marketwatch.com/story/congress-races-to-finish-fiscal-deal-2013-10-16

Thank goodness.
I was getting a bit scared,as I am fully invested in the market at present.

[Beagle]

Retail investors WILL always be at a disadvantage.

Thankfully the American's have kicked the can down the road, (papered over the huge cracks in their system FOR NOW), so in the case of this float for people who are still deciding one way or the other, and taking into account the retail price cap this float appears to be an exception to the rule mate.
There's always the odd exception :) I've tried to like this float, I really have but the older I get the more I tend to take a five year minimum investment time horizon, I ask myself how is a company going to be positioned in five years time, where will the share price be ?
I guess we all have different investment objectives, some are chasing investment yield, I'm chasing growth, although am happy to take divvy's along the way. I think this will be a reasonable investment from a dividend yield perspective but capital gain when the price earnings ratio is already so heavily stretched, (as are power prices), will be very modest, if any.

[Snoopy]

I've tried to like this float, I really have but the older I get the more I tend to take a five year minimum investment time horizon, I ask myself how is a company going to be positioned in five years time, where will the share price be ?
I guess we all have different investment objectives, some are chasing investment yield, I'm chasing growth, although am happy to take divvy's along the way. I think this will be a reasonable investment from a dividend yield perspective but capital gain when the price earnings ratio is already so heavily stretched, (as are power prices), will be very modest, if any.

I've been humming and harring about Meridian too Roger. The decision is not totally clear cut but I have come to the same conclusion as you. The tipping point came with Grant King's Chairman's (of Contact) speech at the Contact AGM on Tuesday. Now I've never heard a chairman stand up at at AGM and forecast a decrease in revenues, still haven't. But King all of did that at the Contact AGM, forecasting zero growth in revenue for several years. Translated that means a decrease. The supply/demand balance for energy in NZ is now on the side of supply. So to be smart energy company, you have to rely on managing costs. Are Meridian up to it?

To answer that question look at what Mighty River have done since becoming an SOE. Now 40% of their generation capacity is geothermal, unaffected by weather. There is one gas powered station in the portfolio, a back up should things get tight. And Mighty River have had a policy of purchasing the surplus energy they need in a declining overall energy demand pool - smart.

Now what have Meridian done since becoming an SOE? Built a few wind farms, OK but those have only about 1/3 the reliability of geothermal energy. Meridian have a policy of running some of their transformer's until they fail to cut costs - not a forward looking policy in my terms. And Meridian still clearly have excess generation capacity for their customer base, not so good if the overall market is static or declining. I don't think Meridian have done anything desperately 'wrong' as such. But they haven't seized the opportunity like Mighty River Power has.

Furthermore if the smelter winds down, Meridian's power generation is in the wrong part of the country. Those hydro assets have another political liability. Meridian will suffer most of the 'big five' under a Labour/Green single power buyer model, because they have the highest proportion of hydro assets in the generation portfolio.

Now we move onto the installment receipt concept. Some here have picked a Meridian total float price of $1.60, with as a result no discount for Mum and Dad investors with $1 down and 60c in 15 months time. With the American debt situation unsettling foreign buyers, I believe this may not be far from the mark. Installment receipts are notoriously volatile. The Labour/Green policy will reportedly drop the value of each MRP share by 70c according to one view. In installment receipt terms that means your installment receipt will drop from $1 to 30c. No I don't think that will happen. But I am almost certain that some time in the next fifteen moths, after a strong Labour/Green poll, the IR price will drop to 80c. It will probably be a brief fall at that price, but this is what I would be eyeing as my entry point. Even if the total float price is $1.80, with $1 deposit, by biding my time I should be able to buy in at $1.40 total if I get my IR timing right. I very much doubt the float price will be above $1.80, which means there is no hurry to get in on the ground floor of Meridian.

Now move onto the overall return. Meridian would yield around 8% gross, with a 10.5cps payout, the mismatch in the maths because such a dividend will only be partially imputed. Actual earnings per share are forecast to rise to 7.2cps in FY2015, which is equivalent to a 6.7% gross profit at $1.60. Not very exciting in a climate of rising interest rates. The magic of being able to pay out more of your than your earnings in dividends for several years is because of the depreciation policy and past upward revision of dam values in a 'mark to market exercise'. But ultimately this policy is not sustainable even if the ultimately bit could extend out a decade or more. I expected some explanation of this in the prospectus, but there is nothing mentioned on depreciation policy - a serious omission in my judgement.

In summary, I think those who apply for Meridian installment receipts will probably do OK, better than bank interest at least. But I can't see the value there, and there are more nimble power companies in the market. At $2.16 and offering fully imputed dividends and with a coherent cost reduction strategy, plus the promised capital return via buyback MRP looks both cheaper, better strategically placed, and better managed than MER at $1.60. In the head for head comparison, MER are ahead on dividend yield, thanks to the Installment Receipt structure only (financial engineering for float purposes). On every other metric MRP is better, including yield on a fully paid up comparison. I will be keeping my money with MRP.

SNOOPY

[percy]

I have driven from Wanaka to Twizel today.
More and more huge irrigators.
Irrigation is growing,and has a lot more growing to do for a number of years yet in Otago,and Canterbury.
Meridian are situated to capture this growth.I think a lot of these irrigators use $50,000 of power a month.It would take our household 25 years to use what these irrigators use in one month.
Looks to me as though Meridian is "well positioned."

[Snoopy]

I have driven from Wanaka to Twizel today.
More and more huge irrigators.
Irrigation is growing,and has a lot more growing to do for a number of years yet in Otago,and Canterbury.
Meridian are situated to capture this growth.I think a lot of these irrigators use $50,000 of power a month.It would take our household 25 years to use what these irrigators use in one month.
Looks to me as though Meridian is "well positioned."

Percy the Manapouri power station can supply enough power for all of Wellington twice over. Just how many irrigators do you expect will be added?

SNOOPY

[percy]

Percy the Manapouri power station can supply enough power for all of Wellington twice over. Just how many irrigators do you expect will be added?

SNOOPY

I do not have the figures.I read the out look for dairy farm and other irrigation uses in a prospectus issued by Tru-Test last December.I have since given away my Tru-Test file,so can not refer to it.So here goes from memory.About a 33% or 50% more than is in use at present.So growth is Huge.
These irrigators are more than a kilometre long.

[GR8DAY]

i'm in. Just applied now - was waiting for confirmation the us situation had been sorted.


...snap tumeric......hope we didnt leave it too late. I had a good sized firm allocation and grabbed the lot......so now we sit back, wait and.......pray??

[BlackCross]

Insties looking for a 1.50 to 1.55 price.

Although Meridian was a good business with some attractions, "I'm not too worried about what we get," said another fund manager. ''We've got plenty of opportunities in the sector. ''I find it fascinating in these processes, the hype trying to stampede you into action from a fear of missing out.''

http://tvnz.co.nz/business-news/low-issue-price-picked-meridian-shares-5646861

[Marilyn Munroe]

Meridian have a policy of running some of their transformer's until they fail to cut costs

SNOOPY

The demarcation point between the generators equipment and Transpower equipment is on the upstream side of the transformers. So if a transformer flashes over Transpower fixes it and pays the costs.

I'm with you Snoopy I reckon MRP is a better bet. I like MRP's geothermal capacity especially as it is not affected by climatic conditions. Also it has better distribution, its factories(power stations) are close to the center of demand(Auckland). An electron energized 600 feet underground way down south in Fiordland will be puffed by the time it gets to Auckland.

Boop boop de do

Marilyn

[Tony Two Gloves]

Question chaps, if this trades at say a 0.10 cent premium day one, will it be at $1.10 or $1.70 assuming $1.60 is the final?

[CJ]

Question chaps, if this trades at say a 0.10 cent premium day one, will it be at $1.10 or $1.70 assuming $1.60 is the final?The installments are what will be traded and still have 60c payable on them to get the shares.

So a 10c premium would be $1.10.

You would buy at $1.10, pay 60c (assuming $1.60 issue price as the $1.60 cap only applies to those in on the IPO) in a years time for a total of $1.70.

[Tony Two Gloves]

Thanks CJ, I am Stagging this big time, $1.10 will work nicely, don't know if I would have the patience to hang around until the first div is paid.

[CJ]

Thanks CJ, I am Stagging this big time, $1.10 will work nicely, don't know if I would have the patience to hang around until the first div is paid.Good luck - If I get my full allotment, I may sell a few as well.

[Snoopy]

The demarcation point between the generators equipment and Transpower equipment is on the upstream side of the transformers. So if a transformer flashes over Transpower fixes it and pays the costs.


Marilyn, I when I wrote what I did I was referring to page 86 in the Meridian prospectus, from which I quote below:

"The generator stators at the Waitaki power station are considered to be in imminent failure condition, but have been operating this way since 1992. A single non earth surge could affect more than one unit. Given the number of units there is spare generating capacity so a run to first unit failure mode has been adopted. Upon first failure the upgrade program for the generators will be initiated."

I wasn't very happy with that policy. If these units have been at imminent risk of failure for 20 years I would take one apart now and overhaul it. This would allow Meridian to see what was going on inside, and give a better insight into why the things just keep going. IMO there is a very real risk that all of these units could fail at once. I regard the declared maintenance program for these units as irresponsible.

Now getting onto the subject of transformers:

"The cooling oil in the transformers at Manapouri contains an anti-oxidising corrosive sulphur compound that is known to lead to the deposition of conductive copper sulphide on the winding insulation of the power transformers that may over time lead to transformer failure. This is an unquantifiable risk as there is uncertainty as to the level of deposition that may lead to transformer failure. Meridian has a programme to monitor the situation, replace the oil and continue monitoring the situation after the oil is replaced, in an effort to mitigate the risk of failure."

To me this reads as though Meridian is responsible for these transformers. I just wasn't happy reading this. If Manapouri is at risk of going down I would put a new transformer on site as a back up and have it ready to be hooked up as soon as the old transformer fails.

This whole section reads like maintenance by an accountant, being prepared to take any commercial risk to stretch out the life of equipment that really should be replaced, all in the interests of shoring up the float financially. Once you have a culture like this in a company I feel it will be difficult to eradicate.

SNOOPY

[percy]

[QUOTE=Snoopy;434159]

"The generator stators at the Waitaki power station are considered to be in imminent failure condition, but have been operating this way since 1992. A single non earth surge could affect more than one unit. Given the number of units there is spare generating capacity so a run to first unit failure mode has been adopted. Upon first failure the upgrade program for the generators will be initiated."

Nice to see Meridian using common sense.
Must admit I agree with this policy.

[Snoopy]

[QUOTE=Snoopy;434159]

"The generator stators at the Waitaki power station are considered to be in imminent failure condition, but have been operating this way since 1992. A single non earth surge could affect more than one unit. Given the number of units there is spare generating capacity so a run to first unit failure mode has been adopted. Upon first failure the upgrade program for the generators will be initiated."

Nice to see Meridian using common sense.
Must admit I agree with this policy.

The policy is only sensible if there is sufficient lead time to fix the generator that fails before the others fail. If all of these generators are on a rotation cycle it is possible that all will fail together. The generators have been operating for 20 years in imminent failure condition. This alone suggests to me that Meridian don't know why they have kept going for so long, but have apparently been warned that they are in imminent failure condition and chosen to ignore that warning.

Perhaps the people charged with maintaining these generators don't have a full understanding of what is going on inside these generators either? The sure way to settle this is to take one apart and find out. If it all checks out, then the maintenance policy is wrong. If the maintenance policy is wrong it should be changed. If the service engineers are right though, that means Meridian has just been saved an unwelcome outage. Whatever the actual condition of those generators, the only sensible course of action is to pull one out of the loop, strip it down and check.

Whatever the actual condition of those turbines, I might be tempted to leave it if it were say a couple of years or even five years outside its design life. But these things have apparently been running on a knife edge for twenty years! I can't see how anyone could come to the conclusion that just leaving things be is good policy.

SNOOPY

[RTM]

I'm really not sure any of us have enough information to second guess the Meridian engineers and management.
Surely they will have done a professional job with a decent understanding of the risks. There are also probably external measurements they can do to be relatively confident that they are still running OK. Sounds like they were a good buy !

[percy]

[QUOTE=percy;434161]

The policy is only sensible if there is sufficient lead time to fix the generator that fails before the others fail. If all of these generators are on a rotation cycle it is possible that all will fail together. The generators have been operating for 20 years in imminent failure condition. This alone suggests to me that Meridian don't know why they have kept going for so long, but have apparently been warned that they are in imminent failure condition and chosen to ignore that warning.

Perhaps the people charged with maintaining these generators don't have a full understanding of what is going on inside these generators either? The sure way to settle this is to take one apart and find out. If it all checks out, then the maintenance policy is wrong. If the maintenance policy is wrong it should be changed. If the service engineers are right though, that means Meridian has just been saved an unwelcome outage. Whatever the actual condition of those generators, the only sensible course of action is to pull one out of the loop, strip it down and check.

Whatever the actual condition of those turbines, I might be tempted to leave it if it were say a couple of years or even five years outside its design life. But these things have apparently been running on a knife edge for twenty years! I can't see how anyone could come to the conclusion that just leaving things be is good policy.

SNOOPY

The statement is very clear;
"Given the number of units there is spare generating capacity so a run to first failure mode has been adopted.Upon the first failure the upgrade program for the generators will be initiated."
Seems to me they have been '"well prepared" for 20 years.
Excellent long term common sense.!

[Newman]

Guess how many people applied for shares

Yesterday when I applied for Meridian shares I got a number of MEL696771xx. Today 1 hour before closing I got another number of MEL697881xx. Does the numbers suggest there were about 110000 new applications just in one day?

[Master98]

I applied on thursday (after ****us deal settled) for me and miss, the money just gone this morning.hope no scale back.

[QOH]

one analyst suggested clients who applied through their broker were likely to be scaled down rather than people who bought through public pool. seems
blatantly unfair, they took my money about two weeks ago. could have got some through public pool if I had known this.

[CJ]

lots of other stock look good next week, so it pays to wait...agree. If MEL stags, I may reduce a bit to take advantage of some of the overselling that has taken place last week.

[percy]

lots of other stock look good next week, so it pays to wait...

You must be looking at stocks I don't hold, as other than EBO ,HNZ ,and SKC all my stocks are looking pretty good.

[Joshuatree]

lots of other stock look good next week, so it pays to wait...
Agree steve am looking to buy in to a few and MRP too looking great value.

[shambles]

696765xx for me .. ordered on thursday - cash came out today.

[percy]

Irrigation.
I have mentioned Tru-Test December 2012 prospectus where they stated they expected huge increases in the use of irrigation in the South Island over the next few years.
Further to this is the takeover of Synliat Farms where they state they will pay down debt and spend more capital on irrigation.
Also an article in The Christchurch Press Mainlander 19/10/2013, headed "Mackenzie Basin";"The Tekapo end of the basin is too cold.But a lot of the stuff that is on the southern side of the main road,should be made into productive land.Down to the stations at Haldon and Grays Hill at the top of Lake Benmore,there is a large area suitable for irrigation that is likely to be developers' next focus."
More irrigation= more big electricity users.Meridian are well placed to meet their growing demands.

[Hoop]

Retract that one. DB stuffed up my order so no longer in.....
Hi Turmeric..It might sound like I'm rushing to DB's defense but I think this situation would apply to all except the on line option.
I left my decision very late too (the US problem was not on my radar...MED is local not global and I waited to gauge the degree of local momentum)...

Wednesday 16th..knowing how the system works (sort of) I rang DB and asked them if it was too late to apply through them? As I was cutting it fine what was the best action to take..I knew the MED online option was OK with their one time direct Debt and DB person agreed this would be the best method to take now, and when asked he advised me that I couldn't do a one time direct debt from my DB trading account to MED...( I suspected that was the case when I asked that question)

I transferred money from my DB trading account on line to my specified bank account before 3pm Wednesday to make sure it went through overnight. I applied for MED online on the Thursday 17th.
The money was debted out of my bank account Friday...(these guys aren't slow ...eh?:))...


There are more floats to come so I thought I'd share this post as the best option for others who decide late.....

[trackers]

696765xx for me .. ordered on thursday - cash came out today.

Mine was 694xxxxx, couple hundred thousand applications in front of you (if they indeed have just incremented each by one), applied on Fri11Oct with one week to run

[Hoop]

All's not lost Turmeric
Watch for the Throwback "event" (~ 60% probability)

6956xxxx

[Hoop]

696765xx for me .. ordered on thursday - cash came out today.

Hmmm interesting..a lot of orders came in on thursday I ordered thursday too.... 6956xxxx

[CJ]

We find out the result of the book build on Wednesday and the allocations on Thursday I think (tough we may be able to work it out on Wednesday if it is formula based like MRP).

Can anyone confirm what the Ticker will be, I have been referring to it as MEL but have seen others call it MED.

[Arbroath]

The NZDX listedbonds trades under MEL so I'd assume the equity will also...


We find out the result of the book build on Wednesday and the allocations on Thursday I think (tough we may be able to work it out on Wednesday if it is formula based like MRP).

Can anyone confirm what the Ticker will be, I have been referring to it as MEL but have seen others call it MED.

[Tony Two Gloves]

If they get heaps of rain maybe it will be MUD....

[MAC]

Update: It looks like the rain gods now favour the MEL float, having been opposed for much of the year;

http://www.electricityinfo.co.nz/comitFta/ftaPage.hydrology

[Snoopy]

I have extended work that I have done on Contact Energy and Mighty River Power previously to try and get an idea of how much it would cost to reproduce Meridians power generation assets on an inflation adjusted basis. Why? Because a potential Labour/Green coalition government has vowed to base the return from power companies around an ‘historical cost plus construction inflation’ formula. I do this to assess the potential downside risk to the MER share price should the government change. Unlike Contact Energy and Mighty River Power, Meridian has wind farms.

To cost the wind farms I have used the publicly available information for ‘Mill Creek’. ‘Mill Creek’ is a 60MW extension to Meridian’s ‘West Wind’ windfarm project in Wellington and was projected to cost $NZ169m to develop. Projected generating capacity is 60MW. This 60MW will be achieved with a series of up to 30 individual wind turbines. So I think it seems reasonable to work out a ‘per Megawatt’ power generation cost, and extrapolate the inflation adjusted cost of rebuilding other windfarms in the Meridian portfolio from that. Since the advent of the 2008 financial crisis, the cost of purchasing wind turbines has come down, even if I suspect the cost of building the foundations and roading access to service them continues to increase.

I have assessed the hydroelectric power stations on the same basis as I did for Mighty River Power. This means a medium sized turbine and associated electrical system, around 80MW,
is valued at $NZ100m with higher capacity turbines and ancillaries scaling up from that basis. Thus a 100MW turbine is valued at $NZ120m, for example. Separate to all of that is the earthworks and concrete construction of the dam itself. These are not generally thought of as working parts subject to wear and tear. An extreme view would be to regard these civil works as ‘sunk costs’, which should be valued at nothing from a power pricing policy perspective. I don’t believe that such an approach is reasonable though, unless you expect the government to bail the generators out and fix these structures up for free should they be damaged by an earthquake.

For civil superstructure associated with power generation, I have assigned a ‘defined cost’. This would certainly be less than replacement in today’s construction dollar terms. Benmore for example I have ‘costed’ at $600m in 2013 dollars. Compare that to the physically smaller 432MW Clyde dam owner by Contact Energy, which had a construction cost of more than $NZ1.6 billion in 1990s dollars. Granted the geology around Clyde construction was more challenging. But Clyde is still the most recent large-scale dam construction in NZ from which we can derive any costing basis.

OK, there is the method I am using. Now, what kind of results am I getting?

SNOOPY

[Snoopy]

My valuation list for the Meridian power generation assets is as follows. Note that for the hydroelectric dams I have split my valuation in two parts.

1/The first part is the dam and associated concrete works.
2/ The second part is for the turbine and the ancillary electrical equipment.

Te Uku (windfarm) 64MW: $NZ180m
West Wind (windfarm) 143MW: $NZ400m
Te Apiti (windfarm) 91MW: $NZ255m

White Hill (windfarm, Australia): $NZ225m
Mt Millar (windfarm, Australia) : $NZ200m

Ohau A (hydroelectric) 264MW: $NZ380m + $NZ300m
Ohau B (hydroelectric) 212MW: $NZ300m + $NZ250m
Ohau C (hydroelectric) 212MW: $NZ300m + $NZ250m
Waitaki (hydroelectric) 90MW: $NZ150m + $NZ100m
Aviemore (hydroelectric) 220MW: $NZ320m + $NZ260m
Benmore (hydroelectric) 540MW: $NZ600m + $NZ600m
Manapouri (hydroelectric) 800MW: $NZ900m + $NZ900m

I get a total of $1,260m for the windfarms and $5,610m for the hydroelectric dams, for a grand total of $6,870m in power generating assets. For ease of calculation I shall assume that all other property plant and equipment balance sheet assets are negligible compared to these operating power generating assets.

Turn to page 136 of the Meridian prospectus and you will see that forecast property plant and equipment assets for FY2014 are $6,954.4m. That is very close to the $6,870m of assets that I have listed above (I didn’t reverse engineer all of this for Meridian, I promise)!

Some would argue that Meridian are sitting on revalued, and grossly overvalued assets that have been inflated in value to justify high power prices. But I have reviewed the likely replacement cost of the working parts of those assets, with a heavily discounted allowance for earthworks and concrete thrown in. This approach shows Meridian’s assets are very much fairly valued. I have previously suggested that Meridian are contributing to the poor health of some NZers, through excessive charging for power. But in light of my systematic calculation I have had to revise that view. It now believe the implication by Labour/Greens that Meridian is overcharging for its power is weak.

SNOOPY

[Xerof]

Snoopdog, did the eureka moment hit you in time to get your application in?

just goes to show what a pair of slippery chaps Cunliffe and Parker are.......

[Snoopy]

I'm really not sure any of us have enough information to second guess the Meridian engineers and management.
Surely they will have done a professional job with a decent understanding of the risks. There are also probably external measurements they can do to be relatively confident that they are still running OK. Sounds like they were a good buy !


Over the weekend someone posted about injecting resin into power station generators stators, as a last end of life fix. That fix has apparently meant these components are now operating twenty years beyond their use by date. These posts may or may not have related directly to Meridian. Nevertheless the tone and detail of those posts suggested that the poster had some inside knowledge of the procedure. These posts have since been removed. That leads me to think that while the offer period was open someone higher up in the hierarchy suggested that such posting was inappropriate. I know who the poster was, and I see no reason to get them into trouble by reidentifying them in on this forum. Nor do I wish to relay any specific possible insider information and so get myself into trouble. However, I see no harm is discussing such a procedure as it relates to power turbines in general.

The subject of depreciation of very long life assets is an interesting one. Industrial componentry can be designed to last for an extremely long time. With purely mechanical components you can do things like inspect the conditions of the bearing surface and measure the wear and tear via float in the components. Electrical systems are a bit more tricky. Often electrical components can work just fine until they suddenly short out. If our NZ maintenance engineers can use their ingenuity to develop a system to extend the life of these components, then that is to be applauded. Resin is usually a non-conductor. So it comes as no surprise to me that it can be used as an electrical fix.

Mighty River Power got some criticism for supplying only an edited version of the engineering report that examined the state of repair of its dams and power stations. Meridian supplied some more information on this subject to their credit. One of the purposes of a prospectus is to outline to investors possible risks for consideration. Some would say if you read through all of the risks in any modern prospectus, then you would never invest! Lawyers do have a habit of wanting to cover themselves, and that is fair enough. Perhaps then I have been too alarmist about some of the disclosed risks in both the Meridian and Mighty River Power float documentation? I do have something to say on the subject of maintenance policy in general though.

To me, it makes no sense to have a maintenance policy where a critical component is listed as still running twenty years past its use by date. I am not questioning the idea of patching up machinery as in the case of Meridian this has clearly worked. What is wrong in this instance seems to be the policy of listing equipment as fully depreciated when there are decades of life left in it.

SNOOPY

[Snoopy]

Snoopdog, did the eureka moment hit you in time to get your application in?

just goes to show what a pair of slippery chaps Cunliffe and Parker are.......


No :-(. However my calculations are really back of the envelope stuff. I was working with ballpark figures and I am sure that Labour/Greens would have to be much more rigorous in setting a policy framework than the sort of thing I have done here. IOW, I may be looking at things the wrong way, and I am sure you could pick holes in my detailing. But you have to start somewhere. From my initial perspective the assets of Meridian are not overvalued.

SNOOPY

[Snoopy]

just goes to show what a pair of slippery chaps Cunliffe and Parker are.......


If you look at note 22 in the MEL annual report for FY2013 (curiously I can't find the information in the prospectus) you will see that Meridian have written down the value of their power assets by $849m. The Meridian prospectus was prepared after the announcement of the Labour/Green single buyer power policy. The Mighty River Power Prospectus was written before. Another way of looking at this is that Meridian have made a pre-emptive strike on the value of their power assets. That means that if the single buyer power policy is implemented, Meridian will be able to point to how reasonably valued their assets are. Cunliffe and Parker would be working on the 'old' Meridian asset values when the single buyer power policy was dreamed up. So they may well have been correct that under the old asset values, Meridian was price gouging.

CJ on the Mighty River thread, has suggested that the write down in Meridian asset values has got something to do with the reduction in discounted future cashflows connected with the renegotiated Aluminium smelter power pricing. He may have a point. However, given a scaling back in the power demands from NZAS, would this not spill over into the market beyond just the effect it had on Meridian? Why did the Mighty River Power annual report, which was distributed after the NZAS power price contract was renegotiated, make no mention of this?

SNOOPY

discl: hold MRP, CEN but not MEL

[FarmerHamilton]

My valuation list for the Meridian power generation assets is as follows. Note that for the hydroelectric dams I have split my valuation in two parts.

1/The first part is the dam and associated concrete works.
2/ The second part is for the turbine and the ancillary electrical equipment.

Te Uku (windfarm) 64MW: $NZ180m
West Wind (windfarm) 143MW: $NZ400m
Te Apiti (windfarm) 91MW: $NZ255m

White Hill (windfarm, Australia): $NZ225m
Mt Millar (windfarm, Australia) : $NZ200m

Ohau A (hydroelectric) 264MW: $NZ380m + $NZ300m
Ohau B (hydroelectric) 212MW: $NZ300m + $NZ250m
Ohau C (hydroelectric) 212MW: $NZ300m + $NZ250m
Waitaki (hydroelectric) 90MW: $NZ150m + $NZ100m
Aviemore (hydroelectric) 220MW: $NZ320m + $NZ260m
Benmore (hydroelectric) 540MW: $NZ600m + $NZ600m
Manapouri (hydroelectric) 800MW: $NZ900m + $NZ900m

I get a total of $1,260m for the windfarms and $5,610m for the hydroelectric dams, for a grand total of $6,870m in power generating assets. For ease of calculation I shall assume that all other property plant and equipment balance sheet assets are negligible compared to these operating power generating assets.

Turn to page 136 of the Meridian prospectus and you will see that forecast property plant and equipment assets for FY2014 are $6,954.4m. That is very close to the $6,870m of assets that I have listed above (I didn’t reverse engineer all of this for Meridian, I promise)!

Some would argue that Meridian are sitting on revalued, and grossly overvalued assets that have been inflated in value to justify high power prices. But I have reviewed the likely replacement cost of the working parts of those assets, with a heavily discounted allowance for earthworks and concrete thrown in. This approach shows Meridian’s assets are very much fairly valued. I have previously suggested that Meridian are contributing to the poor health of some NZers, through excessive charging for power. But in light of my systematic calculation I have had to revise that view. It now believe the implication by Labour/Greens that Meridian is overcharging for its power is weak.

SNOOPY


I'd like to see someone try and build Manapouri for $1.8b in todays construction market .... $5b doesn't seem unrealistic to an absolute layman like myself ( given the cost of building a 4 bed house on a flat piece of land here in Queenstown of reasonable quality is $1m ++

[percy]

I'd like to see someone try and build Manapouri for $1.8b in todays construction market .... $5b doesn't seem unrealistic to an absolute layman like myself ( given the cost of building a 4 bed house on a flat piece of land here in Queenstown of reasonable quality is $1m ++

Thank you for your common sense.!!

[CJ]

Snoop Dog - I am pretty sure they explain the revaluation in the press release that goes with the accounts.

[mouse]

Thank you for your common sense.!!
Plus, these power stations are built in the middle of nowhere. Construction costs then become slightly stratospheric.
UK has just signed a contract with China, and France, to build a new Nuclear Power Station.
http://www.telegraph.co.uk/finance/newsbysector/energy/10392510/Hinkley-Point-good-for-Britain-says-Ed-Davey.html
It is going to cost 14 billion pounds sterling. Just for one power station. We should possibly compare our power station costs with overseas power station costs.

[Snoopy]

I'd like to see someone try and build Manapouri for $1.8b in todays construction market .... $5b doesn't seem unrealistic to an absolute layman like myself ( given the cost of building a 4 bed house on a flat piece of land here in Queenstown of reasonable quality is $1m ++


That is a reasonable judgement FH. As I hinted in my post 425

"For civil superstructure associated with power generation, I have assigned a ‘defined cost’. This would certainly be less than replacement in today’s construction dollar terms."

It is all very well saying if you put the real construction cost of the dams in today's terms into the accounts then MEL is not worth $1.60. The price should be closer to $4. But we all know that Meridian themselves gave up on 'Project Aqua'. And we also know that Mighty River and Contact both see geothermal as the next lowest cost cab off the energy generation rank. I can't see another mega hydro dam being built by anyone in NZ in any current shareholders lifetime. That means IMO it is rather pointless to speculate on replacing these dams at current construction costs.

IMO the value of these dams on a per megawatt basis must now be determined by finding out the per megawatt basis construction cost of the next likely option. At the moment that seems to be geothermal energy.

The other point I would make is that even in the case of a devastating earthquake, it is unlikely that one of these dams would have to be rebuilt from scratch, earthworks and all. IMO, then these dams should be carried on the books at some kind of potential repair cost. I am really guessing what that be, except to say that it will be less than the total rebuild cost. I hope that brings some understanding as to what I was getting at with my dam 'defined cost'. Of course that still doesn't preclude me from being wrong with my dam 'defined cost' figures.

SNOOPY

[Marilyn Munroe]

I'd like to see someone try and build Manapouri for $1.8b in todays construction market .... $5b doesn't seem unrealistic to an absolute layman like myself ( given the cost of building a 4 bed house on a flat piece of land here in Queenstown of reasonable quality is $1m ++

Some general observations about a theoretical rebuild of Manapouri.

While no doubt a rebuild of Manapouri would cost an eye watering amount of money it would be relatively cheaper today. The original drill and blast method has been replaced by cheaper tunnel boring machines. Bechtel would not be doing the fluid dynamics calculations so there is less likely to be stuff-up in the tunnel bore specification, and the design and construction was commenced before the 'dam the dam' level of the lake was settled. Any rebuild would be optimised for current lake level.

Boop boop de do
Marilyn

PS. Snoopy, the North Bank Tunnel project is thought to be the most favoured method of harnessing the Lower Waitaki

[blackcap]

We find out the result of the book build on Wednesday and the allocations on Thursday I think (tough we may be able to work it out on Wednesday if it is formula based like MRP).

Can anyone confirm what the Ticker will be, I have been referring to it as MEL but have seen others call it MED.

I think the ticker initially till 30 April 2015 will be MELCA, to take into account the installment receipt status, thereafter MEL.

[CJ]

Imagine if MEL mirrored the Royal mail IPO:


Cable added on the BBC that the aim had been to secure committed shareholders. About 90 percent of the institutional allocation was placed with long-term investors such as pension funds and life insurance companies, with about 10 percent going to hedge funds, and the majority of institutional orders -- 500 out of about 800 -- received no shares at all.
Among successful subscribers were Threadneedle Investments UK, Fidelity, Blackrock Inc. and Standard Life Plc. (SL/)
The institutional allocation was cut to 67 percent from the planned 70 percent, the government said yesterday, with small investors getting 33 percent of the issue, up from 30 percent, after the stock assigned to them was seven times oversubscribed.
Royal Mail will pay investors a dividend of 133 million pounds in July, the government said, and a notional full-year dividend of 200 million pounds, which translates into a 6.1 percent dividend yield for 2014.
All individuals who applied for 10,000 pounds or less of shares -- more than 690,000 people -- received an allocation of 227 shares, equivalent to 749.10 pounds at the maximum offer price of 330 pence. Those who applied for more than 10,000 pounds got nothing.

How is that for scaling!!! no wonder it popped 38% on the first day!

HT to the Alex cartoon which alerted me to the huge scaling!

[BlackCross]

Got 227 for my UK pension fund. They are now up 54%. Unfortunately I sold them on the first day! Truth is that UBS, Lazards and Goldman Sachs totally mispriced the issue even though many other banks advised that the RM was worth much more. Robbed the UK taxpayer IMO.
Oddly the 670,000 who applied for the RM float would only equate to 46,000 Kiwis applying if a similar float was done here.

[mouse]

[QUOTE=percy;434161]

The policy is only sensible if there is sufficient lead time to fix the generator that fails before the others fail. If all of these generators are on a rotation cycle it is possible that all will fail together. The generators have been operating for 20 years in imminent failure condition. This alone suggests to me that Meridian don't know why they have kept going for so long, but have apparently been warned that they are in imminent failure condition and chosen to ignore that warning.

Perhaps the people charged with maintaining these generators don't have a full understanding of what is going on inside these generators either? The sure way to settle this is to take one apart and find out. If it all checks out, then the maintenance policy is wrong. If the maintenance policy is wrong it should be changed. If the service engineers are right though, that means Meridian has just been saved an unwelcome outage. Whatever the actual condition of those generators, the only sensible course of action is to pull one out of the loop, strip it down and check.

Whatever the actual condition of those turbines, I might be tempted to leave it if it were say a couple of years or even five years outside its design life. But these things have apparently been running on a knife edge for twenty years! I can't see how anyone could come to the conclusion that just leaving things be is good policy.

SNOOPY
The problem is that a Maintenance Engineer is NEVER on the Board. So advice is not forcefully pushed against that of the Accountant. Who always has a short term view. It will take 12 months in my view to order new generators and install them. They are not 'ex stock' Auckland.

[percy]

[QUOTE=Snoopy;434167]
The problem is that a Maintenance Engineer is NEVER on the Board. So advice is not forcefully pushed against that of the Accountant. Who always has a short term view. It will take 12 months in my view to order new generators and install them. They are not 'ex stock' Auckland.

I don't think so.
I expect they have some in the back shed they ordered 20 years ago.Just a matter of dusting them off and fitting them.!!!

[biker]

Anyone have the price yet? If not, any idea what time it's due?

[Snoopy]

Some general observations about a theoretical rebuild of Manapouri.

While no doubt a rebuild of Manapouri would cost an eye watering amount of money it would be relatively cheaper today. The original drill and blast method has been replaced by cheaper tunnel boring machines. Bechtel would not be doing the fluid dynamics calculations so there is less likely to be stuff-up in the tunnel bore specification, and the design and construction was commenced before the 'dam the dam' level of the lake was settled. Any rebuild would be optimised for current lake level.

Boop boop de do
Marilyn

PS. Snoopy, the North Bank Tunnel project is thought to be the most favoured method of harnessing the Lower Waitaki


Thanks for that Marilyn. It just goes to show that if you rebuild something 40 years later it is not just a question of getting out the cost sheet from 40 years ago and requoting.

SNOOPY

[percy]

Well just given the nice lady from Meridian who rang me a pleasant surprise.Yes ,I would love to go back to having Meridian as my power supplier.!!!

[CJ]

Well just given the nice lady from Meridian who rang me a pleasant surprise.Yes ,I would love to go back to having Meridian as my power supplier.!!!Did she ask if you would like shares with that.

I've been on CEN for over a year now so will have to double check I am still on the cheapest for my area/usage - Duel fuel makes it more complicated.

[BlackCross]

A senior figure at a major institutional investor said the range was "effectively" in the $1.50-$1.60.

http://www.stuff.co.nz/business/industries/9317953/Meridian-offer-seen-capped-at-1-60

[RTM]

Did she ask if you would like shares with that.

I've been on CEN for over a year now so will have to double check I am still on the cheapest for my area/usage - Duel fuel makes it more complicated.

When they ring me...and I tell them I am with CEN and pay automatically and get bill on-line....they politely discontinue the conversation. No one has managed to match their price yet. This is in Northland.

[percy]

Did she ask if you would like shares with that.

I've been on CEN for over a year now so will have to double check I am still on the cheapest for my area/usage - Duel fuel makes it more complicated.

She was really surprised when I told her I was becoming a Meridian shareholder.I told her she should get hold of a shareholders's list and phone them.I am on a fixed contract until 31/3/2017.I have CEN for our gass. A $150 'welcome back' credit is a nice bonus.Was offered $75.Told her if she doubled it I would come back.
When I changed from Meridian to Genesis they buggered up my direct debit and were about to cut off our power supply.I was down south for a week and they were refusing to deal with the wife as she was not the a/c holder.Genesis had promised to organise it all. I stayed with CEN for gass as I did not trust Genesis. So pay back time.As a shareholder, Meridian better get it right or Percy will make trouble at Meridian's agm.

[trackers]

So its $1.50, interesting. I'm hoping that's because this is a political football and not poor demand related

Edit: Link http://www.stuff.co.nz/business/industries/9317953/Meridian-shares-at-1-50

[boysy]

This one will need to work for national and co lets see how much institutions stump up and pay

[Mothman]

Broker firm offer scaled by 10% down. And policy on retail offer here

http://www.voxy.co.nz/business/meridian-raises-188-billion/5/171714

[Mothman]

Wrong press release its here:

http://www.scoop.co.nz/stories/PA1310/S00366/meridian-raises-188b.htm

[Joshuatree]

Am i right here ?So that means easy to trade prob no cap to worry about for buyers on mkt.

[Jim]

Wow is $1.50

[Xerof]

JT

Yep, all priced on same basis $1.00 now, 50c later.

interesting they don't advise the level of scaling for insto's, but their wording suggests greater than retail and firm.

anyone know ?

[newtrader]

JT

Yep, all priced on same basis $1.00 now, 50c later.

interesting they don't advise the level of scaling for insto's, but their wording suggests greater than retail and firm.

anyone know ?

As per press release from Mothman

http://www.scoop.co.nz/stories/PA131...aises-188b.htm (http://www.scoop.co.nz/stories/PA1310/S00366/meridian-raises-188b.htm)



General Offer applicants – scaling policy

Given the strong level of demand, progressive scaling has been applied. This means that larger applications are scaled more than smaller ones.Overall, 95 percent of retail applications will receive at least 90 percent of the shares they applied for.
New Zealand retail applications
How your application will be scaled:
You will receive:
First $2,500
The full amount you asked for
From $2,501 to $10,000
90% of what you asked for
From $10,001 to $15,000 85% of what you asked for
From $15,001 to $20,000 75% of what you asked for
From $20,001 55% of what you asked for

Individual investors will receive confirmation of their allocations from Friday 25 October 2013.
Broker firm applicants – scaling policy
Broker firm applications have been scaled on a pro rata basis, as outlined in the offer document. Broker firm client allocations have been scaled back by 10%.

[Newman]

Good price for those who intend to hold for a long time.

[Joshuatree]

cheers Xerof ,that is going to make a big diff imo and is a bonus for us on top of $1.50 No penalty for anyone buying before 18 months makes this so much more liquid hence tradable for thuse inclined which is healthy for the share and the s/p.

[Xerof]

As per press release from Mothman

http://www.scoop.co.nz/stories/PA131...aises-188b.htm (http://www.scoop.co.nz/stories/PA1310/S00366/meridian-raises-188b.htm)

nope, doesn't tell me how much scaling applies to INSTITUTIONS

[newtrader]

Apologies, didn't closely read your post. You're probably correct, institutions will probably be heavily scaled back. Interesting to see overseas instos share is more than double than NZ instos.

[biker]

I think that price augers well for listing , unless Wall Street takes a dive in the meantime.
Pretty well priced I'd say

[CJ]

Reading between the lines 95% of those in the retail offer applies for $10,000 or less.

I assume the big buyers went through the brokers which is lucky as over $20k, retail got scaled down to 55%

Let's hope the NZ insto's got scaled big time, especially those that talked it down.

[Daytr]

Hi all, I may be reading into this incorrectly, but the general flavor of what I am reading is that people are in for a quick buck. i.e. sell pretty much after it floats. Nothing wrong with trying to make a quick buck, but however if everyone is trying to do the same thing... Just saying. Perhaps instos that need it their portfolio will be your savior. I just get a nasty feeling that this thing is going to tank. Could be wrong & could be biased as I don't think these assets should be floated at all as I have seen the damage done overseas. Anyway good luck to all hope it goes well for you. Cheers Daytr

[Joshuatree]

With Instos significantly scaled back and the price at the lower end underpinned by the D/Y I'm thinking its looking good. I have no intention of selling in the short term myself, looking forward to div and some s/p gains.Also have no int in attracting the IRD .

[iceman]

Hi all, I may be reading into this incorrectly, but the general flavor of what I am reading is that people are in for a quick buck. i.e. sell pretty much after it floats. Nothing wrong with trying to make a quick buck, but however if everyone is trying to do the same thing... Just saying. Perhaps instos that need it their portfolio will be your savior. I just get a nasty feeling that this thing is going to tank. Could be wrong & could be biased as I don't think these assets should be floated at all as I have seen the damage done overseas. Anyway good luck to all hope it goes well for you. Cheers Daytr

I'm not sure if that's true Daytr. I believe many posters on here are, like myself, buying this as a long term hold. That means way beyond the next election. I am very pleased to be buying MEL at $1.50 and look forward to a good dividend stream in the future.

[percy]

I'm not sure if that's true Daytr. I believe many posters on here are, like myself, buying this as a long term hold. That means way beyond the next election. I am very pleased to be buying MEL at $1.50 and look forward to a good dividend stream in the future.

Unless something happens to make me change my mind I am looking to hold for ever.

[RTM]

Percy....you are acting as our government should have. Me to.

Its a sad day to see this large share of our assets go.
Its sad that the price is so low for the NZ tax payer.
Its sad that there are so few New Zealanders participating.
Its sad that mostly rich folk are benefiting with bigger holdings...and that ultimately the NZ tax payer base will bear the cost of this.

Ah well...such is life(politics) ...move on RTM and hopefully enjoy the dividends.

But its a sad day guys....from my perspective anyway.

[Balance]

Percy....you are acting as our government should have. Me to.

Its a sad day to see this large share of our assets go.
Its sad that the price is so low for the NZ tax payer.
Its sad that there are so few New Zealanders participating.
Its sad that mostly rich folk are benefiting with bigger holdings...and that ultimately the NZ tax payer base will bear the cost of this.

Ah well...such is life(politics) ...move on RTM and hopefully enjoy the dividends.

But its a sad day guys....from my perspective anyway.

Spare a thought for those who bought MRP.

Investment is not a sure winner thing - it comes down to case by case.

NZ government have sold BNZ, CNIF, Air NZ, NZ Steel etc for some great returns for tax payers as well.

[BlackCross]

At last, NZ treasury have priced an offer 'to go' and left something in it for the next man:).
Personally I'll be more than happy to sell if the part-paid get anywhere near $1.25.

[mouse]

Unless something happens to make me change my mind I am looking to hold for ever.
Percy, at your age that could be only twelve months!
The problem facing all of us older chaps.

[Xerof]

Well, according to pumpkinhead shadow minister of SOE (he's more like an eclipse), we have been granted a gift at 1.50.

i agree, thanks to labour/greens nationalisation plan threat

[Tony Two Gloves]

Black Cross a $1.25 would be great and I will be gone to, not sure if that will be realistic though. What are others thought on first day price?

[GR8DAY]

........about time we got something back. Ive just bought part of a power station which we stole off the government and that feels good. Agree we've got ourselves a bargain......just hope the market sees it that way also. Picking $1.15/1.25 opening.

[Xerof]

My read of it is that although 'only' 62,000 shareholders, most came through the firm allocation route, in larger lot sizes, i.e. Seasoned investors who are buying as yield play for the long term.

everyone has been scaled, I will be buying my shortfall on any weakness shown in the first few weeks, as I'm guessing will many others.

the key will be the institutions, who have possibly deliberately low-balled the book build, and lie in wait to pick off the weak holders/staggers.

They have been scaled, and it says a lot that the level of institutional scaling has not been declared. The only guidance given is 'substantial'

[NOCASH]

What will the opening price me? I think it will be $1.00 then slowly go up to $1.05 and die down to 90's cents.

[warthog]

Percy....you are acting as our government should have. Me to.

Its a sad day to see this large share of our assets go.
Its sad that the price is so low for the NZ tax payer.
Its sad that there are so few New Zealanders participating.
Its sad that mostly rich folk are benefiting with bigger holdings...and that ultimately the NZ tax payer base will bear the cost of this.

Ah well...such is life(politics) ...move on RTM and hopefully enjoy the dividends.

But its a sad day guys....from my perspective anyway.

The Hog wonders who here complaining about the National government selling national assets voted for National/ACT/Maori Party/Peter Possum?

[RTM]

What I'm really concerned about is that this shambles with the asset sales, the supporting of John Banks, etc etc, will mobilise voters towards a Labour / Green coalition. That's exactly what the country needs. Yeah Right !

[Joshuatree]

Im leaning their way .SKC shareholders will be worried; sorry no sympathy from me as im anti gambling. And who in their right mind would support John "i didnt read it" banks?

[percy]

I have just checked my holding with computer share.I received 10,000 firm from Craig's and have been issued 9,000.
Pretty happy with that.I expect the wife will receive the same.Will most probably add to our holdings when they list.

[Joshuatree]

Good one percy. Looking a bit like a gift horse with a tigers tail:).

[dsurf]

It is crap that the retail investors do not know the scaling of the Institutional Offer. The insto's know the scaling of the retail offer & the insto offer. Can this really be a "fully informed market"? Anyone know if this is legal as per NZX rules or can MEL get away with it under the prospectus. I would love to know what the insto's applied for.

[Joshuatree]

Have just asked my broker that question surf. "no we are trying to find that out now". Will let you know if i get the facts ( before anyone else)

[GR8DAY]

I have just checked my holding with computer share.I received 10,000 firm from Craig's and have been issued 9,000.
Pretty happy with that.I expect the wife will receive the same.Will most probably add to our holdings when they list.


hi Percy......do you do that on-line or by picking up the dog n' bone??

[dsurf]

http://www.reuters.com/article/2013/10/23/newzealand-meridian-idUSL3N0ID1OP20131023

reuters article quite bullish, suggesting sold cheap to appease public after MRP. Good ausi insto demand. Pick $1.11 open.

[GR8DAY]

..........got it on line! Scaled back by 10% thru ANZ.......happy with that.

[percy]

hi Percy......do you do that on-line or by picking up the dog n' bone??

Did it on line just before I posted.

[Banksie]

I bought retail and have no scaling...but I did apply for less than Percy.

[percy]

Good one percy. Looking a bit like a gift horse with a tigers tail:).

JT,I can't help thinking we are "well positioned."!!! lol.

[minimoke]

Well I reckon this soe sale process has turned into an unmitigated disaster. I didn't get any mrp or mer in the hope of staging.
Mrp now down to $2.15, that's a fail for shareholders.
$1.50 on instalment is a joke for the tax payer. Spin reckoned over 150,000 buyers. Only 66,000 turned up to play. That doesn't bode well for stags

Good luck to those who got their allotment for a long term hold. I reckon you would have been better off waiting for the market to settle before buying.

[bull....]

http://www.reuters.com/article/2013/10/23/newzealand-meridian-idUSL3N0ID1OP20131023

reuters article quite bullish, suggesting sold cheap to appease public after MRP. Good ausi insto demand. Pick $1.11 open.

didnt the papers report that the aussie fund managers dumped mrp on listing , wonder if this will happen again?

[mp52]

Just a quick noob question here. Anyone knows what the process is for retail investors who bought via the Gov website and don't hold a CSN/HRN number? Will they be issued one as part of the process? If not, how would they attach a holding to their CSN/HRN if/when they get one?

[newtrader]

Just a quick noob question here. Anyone knows what the process is for retail investors who bought via the Gov website and don't hold a CSN/HRN number? Will they be issued one as part of the process? If not, how would they attach a holding to their CSN/HRN if/when they get one?

You will be issued a CSN with the holdings attached.

If you have an existing CSN but didn't provide it during the application for shares, you can make a request to the registry to merge your holdings under one CSN.

[Anonymous]

Does anyone know when money will be returned from scaling?

Also, I understand very heavy scaling for instos. Maybe 40%.

[CJ]

Does anyone know when money will be returned from scaling?Per the prospectus, to be issued on 4 November (but no later than 6th)

[RTM]

Just checked my holding with computer share.I applied for 10,000 direct and have received 9250....Like Percy...happy enough with that.
Fingers crossed that they list well.

[iceman]

Just checked my holding with computer share.I applied for 10,000 direct and have received 9250....Like Percy...happy enough with that.
Fingers crossed that they list well.

10% scaling for me. Applied for 15,000 and got 13,500 through ANZ.

[Xerof]

Everyone is at same price. $1.00 down, 50 cents on layby

[Xerof]

Does anyone know when money will be returned from scaling?

Also, I understand very heavy scaling for instos. Maybe 40%.

I guess everybody will get one but I just got an email from the representatives of HM The Queen, saying the refunds will be despatched on 30 October. If you gave an account number for your divi's, look for it there, otherwise the cheques in the mail

[777]

Code to be MELCA

[GR8DAY]

.......even at $1.15 they/we are in for about a 12% return in year 1.........if Im correct??.......they won't be able to resist that sort of annualized return for their clients!! (im picking $1.15 plus day1)

[Xerof]

This is a gift price with benefits

it's insanely laughable

[Jaa]

I applied via the website for 30,000 and been allocated 22,750, 75.8% of what I asked for. If I had applied via John Key's rich broker mates (and thus giving them a juicy cut via stamp duty) I would of got 90% or 27,000 shares. This is despite plenty of hints that average retail investors applying via the public pool will be favored over the broker pool.

No wonder why so few people bothered. To many games being played and a lack of transparent information.

When will they learn that if they have to flog off public assets, to do so at the highest price possible and to allocate to NZ investors and institutions first and then to overseas buyers?!?! I was willing to pay $1.6 and have no intention to sell. Hell I still hold all of my CEN allocation from 1999!

No doubt the investment bankers advising the government made a killing for all the self interested advice they gave. Maybe this is what Bill English meant when he referred to helping NZ's investment community... by transferring taxpayer dollars to well paid brokers!

[GR8DAY]

hey JAA........just be thankful you got that number......you shud do all right out of that Im picking. Yes their might be fewer mums and dads into this float but the big players have piled into it I believe.

[CJ]

so why have the broker firm allocation only been scaled 10%
disc have heaps coming via brokerwhy were retail scaled at all when we were willing to pay $1.60. Insto's who only bid up to $1.50 should have been scaled severely!

[Balance]

why were retail scaled at all when we were willing to pay $1.60. Insto's who only bid up to $1.50 should have been scaled severely!

If it's good, you will get scaled back.

If it is not good, you will get all you want.

Be thankful there's some small scaling back!

[Banksie]

so why have the broker firm allocation only been scaled 10%
disc have heaps coming via broker

Have they only been scaled by 10%. I can't find an article that states that. I suspect there is a sliding scale at play. I had no scaling, percy 10%, jaa ~25%.

This article from this morning says:

http://www.nbr.co.nz/article/meridian-will-list-xxx-ck-147552

"While Meridian will be 86.7 percent owned by New Zealanders, including the government, but it is clear it has attracted larger retail investors as there is scaling back required for some investors, who will be unable to buy as many shares as they applied for.Investors who sought more than $20,000 of shares will receive only 55 percent of what they sought."

[Xerof]

why were retail scaled at all when we were willing to pay $1.60. Insto's who only bid up to $1.50 should have been scaled severely!

as were broker firm bids willing to pay $1.60

anonymous posted an unconfirmed comment that Insto's are scaled 40%.

Banksie, they had the right to scale firm broker apps up to 20%, but only 10% was the outcome

[troyvdh]

Dear balance...well said...it aint rocket science is it.Cheers

[Banksie]

Banksie, they had the right to scale firm broker apps up to 20%, but only 10% was the outcome

Ta Xerof, yup I missed that. Here is an an analysis by Scoop on the scaling.

http://www.scoop.co.nz/stories/BU1310/S00892/meridian-unbundled.htm

[Hoop]

Hmmm I got scaled back...so maybe we may see a lift in price on debut to satisfy unfilled demand
Does anyone have an opinion about MRP... Will it receive a MELCA effect ??????

[TimmyTP]

I applied via the website for 30,000 and been allocated 22,750, 75.8% of what I asked for. If I had applied via John Key's rich broker mates (and thus giving them a juicy cut via stamp duty) I would of got 90% or 27,000 shares. This is despite plenty of hints that average retail investors applying via the public pool will be favored over the broker pool.

No wonder why so few people bothered. To many games being played and a lack of transparent information.

When will they learn that if they have to flog off public assets, to do so at the highest price possible and to allocate to NZ investors and institutions first and then to overseas buyers?!?! I was willing to pay $1.6 and have no intention to sell. Hell I still hold all of my CEN allocation from 1999!

No doubt the investment bankers advising the government made a killing for all the self interested advice they gave. Maybe this is what Bill English meant when he referred to helping NZ's investment community... by transferring taxpayer dollars to well paid brokers!
According to the mail I received, you have been allocated exactly according to the sliding scale:


How your application will be scaled:

You will receive:



First $2,500

The full amount you asked for



From $2,501 to $10,000

90% of what you asked for



From $10,001 to $15,000

85% of what you asked for



From $15,001 to $20,000

75% of what you asked for



From $20,001

55% of what you asked for

[blackcap]

According to the mail I received, you have been allocated exactly according to the sliding scale:


How your application will be scaled:

You will receive:





First $2,500

The full amount you asked for



From $2,501 to $10,000

90% of what you asked for



From $10,001 to $15,000

85% of what you asked for



From $15,001 to $20,000

75% of what you asked for



From $20,001

55% of what you asked for




Thats only in the public pool TimmyTP. Firm via your broker is different. I went via both and have different scalings on my applications.

[MrAT]

you have to wait almost 2 weeks before money returned.

What really grinds my gears is that they take so long to return funds to people who have been scaled

[GR8DAY]

I think we can thank the instos for forcing down the price of MRP and thus set up a bargain price for MEL......in my opinion their ploy has worked!! Expect to now also see a steady recovery in the MRP price from today.

[percy]

Hmmm I got scaled back...so maybe we may see a lift in price on debut to satisfy unfilled demand
Does anyone have an opinion about MRP... Will it receive a MELCA effect ??????

I expect you will have new indicators to add to your charts.
Rainfall in each company's catchment area.!!
Rainfall relative strength.Rainfall volume,maybe a rainfall 30,50 and 100 day averages,and rainfall MACD.
I expect you to be the first with such detailed charts.!!!!!

[percy]

Irrigation again.
From Port of Tauranga agm.Timaru Port's growth.More large irrigation schemes are being built in the area.
More electricity for 'well placed' Meridian to supply.

[tango]

I hope Mighty River recover. I held mine and am still waiting for them to lift!

I've never owned installment shares before. Will the quoted selling price be at $1.00 + / - market movement or $1.50 +/- market movement?
I guess it's at $1.00?

[Balance]

My understanding after talking to a broker is that Treasury still wanted and advised English to set the price at $1.60 per share and there was more than sufficient demand to cover the IPO.

Common sense prevailed but institutions were severely scaled back.

The scene is set for Meridian to debut at $1.10 to $1.15.

[tango]

Interesting what political decesion are made and why. $1.50 is not a good deal for the taxpayer other agenda's at play with this one.

Good point but they can't afford to risk another share float bomb or there won't be any investors for future floats.

[Joshuatree]

Irrigation again.
From Port of Tauranga agm.Timaru Port's growth.More large irrigation schemes are being built in the area.
More electricity for 'well placed' Meridian to supply.

Thats good to see some new electricity users. Also we are entering the Electric Car age(driverless too) so imagine say a million cars all plugged in all night recharging. Who needs tiwai in 4-5 years

[CJ]

Also we are entering the Electric Car age(driverless too) so imagine say a million cars all plugged in all night recharging. Who needs tiwai in 4-5 yearsI am waiting for two things - A Tesla show room to open in NZ and a job that pays enough for me to afford one.

In 10 or so years, ever familys 'second car' should be an electric.

[Joshuatree]

Cant access it. I ilke gaynor but like sheather hes promoting himself to the "mums and dads" with the constant insinuation "its too hard, too risky too complicated , trust me with your funds youll be right with me" ( i'll get the fees hee"). And he is an ok fund manager although i havnt checked all his fund performances

[percy]

Cant access it. I ilke gaynor but like sheather hes promoting himself to the "mums and dads" with the constant insinuation "its too hard, too risky too complicated , trust me with your funds youll be right with me" ( i'll get the fees hee"). And he is an ok fund manager although i havnt checked all his fund performances

Reminds me of the old joke;"Hi,I am from the Tax Dept,and I am here to help you.!" lol.

[blackcap]

Reminds me of the old joke;"Hi,I am from the Tax Dept,and I am here to help you.!" lol.

haha thanks Percy. Definitely a lol moment in my office as I read that....

[mouse]

Reminds me of the old joke;"Hi,I am from the Tax Dept,and I am here to help you.!" lol.

Exactly. Fund Managers charge 'Admin' even if they make a loss!!!

[Balance]

Cant access it. I ilke gaynor but like sheather hes promoting himself to the "mums and dads" with the constant insinuation "its too hard, too risky too complicated , trust me with your funds youll be right with me" ( i'll get the fees hee"). And he is an ok fund manager although i havnt checked all his fund performances

Just like Ecoya and Moa Beer being too difficult for Moms and Das - but oops, too hard for Gaynor and his crew as well!

They bought in high and sold out low!

[Marilyn Munroe]

More large irrigation schemes are being built in the area.
More electricity for 'well placed' Meridian to supply.

While new irrigation capacity is being installed it has a different energy usage profile than a lot of the installed capacity. It would be unwise to assume that electricity usage would increase in lock step with irrigation capacity increases.

A lot of existing irrigation uses deep bores with high energy input submersible pumps bringing water to the surface, pressurising the water distribution pipes and the irrigators themselves. A lot of the new capacity is take off from rivers and is distributed by gravity fall. In addition most new capacity uses pivot irrigators which are designed to operate at lower water pressures.

Boop boop de do
Marilyn

[percy]

While new irrigation capacity is being installed it has has a different energy usage profile than a lot of the installed capacity. It would be unwise to assume that electricity usage would increase in lock step with irrigation capacity increases.

A lot of existing irrigation uses deep bores with high energy input submersible pumps bringing water to the surface, pressurising the water distribution pipes and the irrigators themselves. A lot of the new capacity is take off from rivers and is distributed by gravity fall. In addition most new capacity uses pivot irrigators which are designed to operate a lower water pressures.

Boop boop de do
Marilyn

I have been told most irrigators use $50,000 of power a month.[when in use]
Going by the huge transformers on the power poles it is easy to see who are the big power users.

[warthog]

Thats good to see some new electricity users. Also we are entering the Electric Car age(driverless too) so imagine say a million cars all plugged in all night recharging. Who needs tiwai in 4-5 years

Yes. That's why the Hog has bought some Meridian, and may well pick up some more after Tuesday, price permitting.

[mouse]

Yes. That's why the Hog has bought some Meridian, and may well pick up some more after Tuesday, price permitting.
Mighty River may be a better bet. Although the price has not settled.

[peat]

Exactly. Fund Managers charge 'Admin' even if they make a loss!!!

this is not so unreasonable in itself.

[mouse]

this is not so unreasonable in itself.

Paying fees to get your cash spent!

[Food4Thought]

http://www.stuff.co.nz/business/industries/9329227/Solar-systems-more-affordable

This is of interest. Out of reach of many, but a consideration I have for my own place. Not a bad return on investment in my eyes. A consideration for all who invest in electricity generators. Lowering the price of producing your own electricity. Something that could influence the return power generators receive. I consider it like a car, years ago, one car was a real luxury for many families, now, it is common for most family households to have at least 2. Same goes for electricity production. And even then, the true efficiency that could be achieved if other technologies became main stream, would be enormous. Forget about your energy saver bulbs... start looking at heat recovery and heat exchange. I am all for reducing consumption on non renewable resources (coal in this case).

[bull....]

ill stick with my earlier post 20c in it + divs after 18 mths more if nat win election

[biker]

I think MELCA will list at a premium but like MRP will they shortly thereafter drop below issue price?
I doubt it, being installment receipts and with such a relatively high dividend yield, and being issued at a much more realistic price than MRP.
I'm planning on holding these for the yield and possible uptick on another National led Government.
I would consider getting out if Lab/green re emphasize their energy policy, campaign on it and look like they may get over the line. All doubtful IMO.

Disc. Hold quit a few so I'm biased.

[Winston001]

Apparently David Cunliffe won't commit to the electricity buying authority saying instead that Labour would look at it once elected. Seems an odd backdown or fudge - anyone know more?

[Joshuatree]

http://www.stuff.co.nz/business/industries/9329227/Solar-systems-more-affordable

This is of interest. Out of reach of many, but a consideration I have for my own place. Not a bad return on investment in my eyes. A consideration for all who invest in electricity generators. Lowering the price of producing your own electricity. Something that could influence the return power generators receive. I consider it like a car, years ago, one car was a real luxury for many families, now, it is common for most family households to have at least 2. Same goes for electricity production. And even then, the true efficiency that could be achieved if other technologies became main stream, would be enormous. Forget about your energy saver bulbs... start looking at heat recovery and heat exchange. I am all for reducing consumption on non renewable resources (coal in this case).

Good thoughts F4T. My bro has just got back from England and couldnt believe the number of solar panels on Houses(subsidies?). I guess being lucky; having a North facing roof is necessary to convert enough energy too. Must be good feeling too knowing if the GRid goes down , your comforts and necessities don't.Thinking Global acting local.

[CJ]

Apparently David Cunliffe won't commit to the electricity buying authority saying instead that Labour would look at it once elected. Seems an odd backdown or fudge - anyone know more?has that been quoted anywhere. They have been strangely quiet this IPO


. Must be good feeling too knowing if the GRid goes down , your comforts and necessities don't.if it goes down during the day. Otherwise you need to consider some kind of battery storage for nights:

http://vector.co.nz/solar

[fungus pudding]

Apparently David Cunliffe won't commit to the electricity buying authority saying instead that Labour would look at it once elected. Seems an odd backdown or fudge - anyone know more?

Parker was dead against it until Shearer came out with Russel Norman in favour of change. It was a political stunt to derail the partnership floats. It cost the taxpayer, but should benefit investors because the proposal will probably get quietly forgotten. Anyway, National has an excellent chance of winning a 3rd term.

[Arbroath]

Parker was dead against it until Shearer came out with Russel Norman in favour of change. It was a political stunt to derail the partnership floats. It cost the taxpayer, but should benefit investors because the proposal will probably get quietly forgotten. Anyway, National has an excellent chance of winning a 3rd term.


touche - see the latest opinion poll. Nats on 50%, Lab/Green 44%

[troyvdh]

Honestly this quite depressing....why on earth cant the labour party muster sufficient political/moral/economic grunt to be a true rival to the nats...do not get me wrong here..Im a nat...BUT I do not always agree with JK et al...i.e. imported trains....retirement age etc....

[Master98]

Honestly this quite depressing....why on earth cant the labour party muster sufficient political/moral/economic grunt to be a true rival to the nats...do not get me wrong here..Im a nat...BUT I do not always agree with JK et al...i.e. imported trains....retirement age etc....
LOL. agreed. me thinks labour/green party may should have another new leader with economic sense before next election.

[janner]

have you given any thought to maybe cunliff has a share portfolio that now includes meridian

With Cunninglife being a two faced person ( IMHO ) you are probably correct..

How many Liabour Mp's have MRP and Meridian in their portfolios .. Back door or open door ??

[Master98]

if labour/green MPs can have a disclosure their holding regarding MRP and MELCA could help them gain some support percentage.

[CJ]

touche - see the latest opinion poll. Nats on 50%, Lab/Green 44%latest TVNZ poll - Nat 43% Lab/Gre 47%

[Marilyn Munroe]

Sell sell sell. Meridian are spilling water at the dams in the Waitaki.

My informant ruefully commented that previously he regarded water rushing down the spillway as a spectacle. Now he is a shareholder he views it as liquid money going to waste.

Boop boop de do
Marilyn

[Joshuatree]

Yesyesyes like your own sacred personal reservoir of inner essence never never never , spill a drop!!!.EVER....

[Joshuatree]

Cant get onto NZX. Anyone else having a prob.? Alot of int in listing and NZX overloaded maybe

[Wolf]

Ive got the same problem..

[Joshuatree]

Im in now 8 9 10

[NOCASH]

I am excited, hopefully we will hit $1.10 before trading closes.

[bmrm]

Cant get onto NZX. Anyone else having a prob.? Alot of int in listing and NZX overloaded maybe

I would be very surprised (and dismayed) if the NZX site couldn't handle a pretty high level of traffic.

[minimoke]

I am excited, hopefully we will hit $1.10 before trading closes.
Well closed the day at $1.077 and didn't get to $1.10. Since I didn't stag this float I'm pretty happy so far with that. Might get to over $1.10 over the next couple of weeks so I might still rue my decision.

Pretty good day for IRD - collecting all that tax on the $289m worth of trades. It would be even better if they charged GST on transactions. And of course, as per usual who are the real winners - the brokers. I bet they are swilling the champers tonight and toasting the National government once again.

[blackcap]

Pretty good day for IRD - collecting all that tax on the $289m worth of trades..

I doubt that very much. A lot of it will be foreign and so they will not pay tax here....

As for GST on transactions... the sharemarket would grind to a halt and there would be zero trading. Imagine having to pay an extra $150 (GST) on a $1000 buy or sell order...

[Sideshow Bob]

Looks like about 21% of the instalment receipts floated were traded today!!

[minimoke]

I doubt that very much. A lot of it will be foreign and so they will not pay tax here....
.

Yes I imagine you are right. So national sell off assets at bargain prices so foreigners can profit. You don't hear about that in their policy

[minimoke]

As for GST on transactions... the sharemarket would grind to a halt and there would be zero trading. Imagine having to pay an extra $150 (GST) on a $1000 buy or sell order...
Yes imagine. We have learnt to cope in the property market but I keep forgetting the finance industry is the other group of special people in nz.

Edit. To be clear I meant g s t on commissions

[777]

Yes I imagine you are right. So national sell off assets at bargain prices so foreigners can profit. You don't hear about that in their policy

We are talking less than $28m profit here. What is the drama?

[Zaphod]

Yes I imagine you are right. So national sell off assets at bargain prices so foreigners can profit. You don't hear about that in their policy

Bargain prices? What do you believe Meridian was worth?

[minimoke]

Week edison had them valued at 1.70 to 1.86

[blackcap]

Do people really give much sway to Edison valuations? I have seen a lot of people post on here quoting "Edison", but in my opinion, they are often very far off the mark. I mean they value CRP at something ridiculous like $2 per share.

p.s thanks for clearing up the GST bit on commissions Minimoke, I was really getting concerned there ;) I could well live with that yes, but it would not change anything for the punter, in fact it would probably make it more expensive for us as the brokers/fundies just pass on the costs.

When I participated in the Telstra IPO I made profit for NZ at the expense of Australia. Swings and roundabouts I say.

[warthog]

Would never work like that blackcap, and why the heck should financial services fees be exempt? Nobody has ever offered the Hog a reasoned argument as to why this is so.

It would only ever be on the brokerage, so more like $4.50 for a $1000 purchase.

Not so bad when we're looking at the right figures eh?

[minimoke]

Do people really give much sway to Edison valuations? I have seen a lot of people post on here quoting "Edison", but in my opinion, they are often very far off the mark. I mean they value CRP at something ridiculous like $2
Well Devon funds had it at around $5.5b and MAquarrie , pwc and treasury at around $6.5 b. And what is it with today?

[blackcap]

Quote from David Cunliffe on Firstline just now. I did not know he was such a blatant liar. What an idiot: "The number of Kiwi's owning meridian has gone from 100% to about 2%"

You better check where you get your figures from.

[minimoke]

Quote from David Cunliffe on Firstline just now. I did not know he was such a blatant liar. What an idiot: "The number of Kiwi's owning meridian has gone from 100% to about 2%"
.
I guess we could argue even less. Say 4.4m NZ’ers. 66,000 retail investors at listing equals 1.5% own Meridian. Say half these sold out yesterday. That leaves less than 1% of NZ’ers actually having a voting right in Meridian.

Kiwis never really owned Meridian in the first place. Sure tax payers paid for it but it was basically held on behalf of Kiwis or overseas business to some extent if you take Tiwai into consideration.

[Joshuatree]

Good point tho. Selling something we all own to an elite few; us.This will come back on National and swing some votes.

[blackcap]

come on Minimoke. You really do not think half of the retail investors sold out yesterday do you?
Cunliffe is not comparing apples with apples using your logic. If its under 2% now, it was never 100% in the first place.

[minimoke]

Well Devon funds had it at around $5.5b and MAquarrie , pwc and treasury at around $6.5 b. And what is it with today?


come on Minimoke. You really do not think half of the retail investors sold out yesterday do .

I have no idea. But we do know 268m shares changed hand yesterday and they had to come from somewhere

[blackcap]

I have no idea. But we do know 268m shares changed hand yesterday and they had to come from somewhere

Blocks of 10 million, 5 million, 3 million etc were traded frequently. Somehow I do not think this was retail investors. I believe of the 268 million shares that changed hands not more than 30 million (but that is being very generous) were retail sellers. On the other side, retailers would have been buying as well. (although not as much as institutions. The same NZ institutions that are buying on behalf of Kiwi Saver and other NZ super funds.

[Zaphod]

Week edison had them valued at 1.70 to 1.86

That's just a nominal value and we have seen quite a variety of calculations on the worth of Meridian.

The bottom line is that the real worth of a product or service is what the market is prepared to pay. Clearly, the market do not value Meridian as worth $1.70. This could however change in the future, especially subsequent to the additional $0.50 being paid by investors.

[blackcap]

the market can be slow to work out fair value for a stock.
IMHO MEL is cheap cheap cheap and a great medium term hold (5 years).

The IPO being priced at 1.50 is rediculous and yesterday share price was held down by quick profit takers (maybe today as well).
I dont think it is going to do an MRP(down 13%) in a couple of months if the markets stay bouyant.
Me thinks the offshore buyers wont stop buying it under 1.10 and should settle between 1.08-1.15 mark.

Think you may be right there Snapiti. Just looking at early trading, there seems to be huge insto support. The 1.10 offers got taken out, they are the weak staggers. There were 44 of them for about 4 million shares. Retail.

[Hoop]

1.08 Depth resistance nibbled away pre open
Now into 1.09 -1.10 resistance zone .......if this zone gets nibbled away MELCA will rise up to the next resistance at 1.15.

Minimal downside atm great support building up at 1.05..

No need to stag this stock as its potentially rising with a safety net at 1.05.

Disc: holding

[bull....]

good early support my 20c + divs looks good at this stage

[biker]

That's just a nominal value and we have seen quite a variety of calculations on the worth of Meridian.

The bottom line is that the real worth of a product or service is what the market is prepared to pay. Clearly, the market do not value Meridian as worth $1.70. This could however change in the future, especially subsequent to the additional $0.50 being paid by investors.

The Market does value Meridian at 1.70 ( or close to it.) 1.10 + 50c + 18 months to pay, has Edisons estimated value 0f 1.70 to 1.86 reflected by the market

[CJ]

The Market does value Meridian at 1.70 ( or close to it.) 1.10 + 50c + 18 months to pay,The PV of 50c in one year at 10% is 45c which makes the market value of the share $1.55.

Devon puts the value of MEL at $1.10 with a Labour government and $2 with a National govt after next election. I guess that means there is a 50:50 chance of Labour getting in and implement which seem to high (even if they do get in, I dont see them implement as previously set out).

[TimmyTP]

Cool, my refund for the scaling just came back, so much for the whinging about them holding on to it for two weeks!

[CJ]

Cool, my refund for the scaling just came back, so much for the whinging about them holding on to it for two weeks!Just been deposited into my ASB account as well (it didn't go in overnight so must be in the last 3 hours). Nice and speedy.

[biker]

50c to pay on a share in 18 months in my mind makes it effectively worth more that 50c today. It is a payment to be made, not money to be received, in 18 months, so in effect PV is greater? Interest free money loaned today must be worth more than when it must be paid back in 18 months

[QOH]

Cool, my refund for the scaling just came back, so much for the whinging about them holding on to it for two weeks!

Well I'm still whinging my money was taken out on October 10th, and I just had a look at my account and it hasn't been refunded yet. it's an ANZ account so not some obscure place they had to refund it to.

[Arbroath]

50c to pay on a share in 18 months in my mind makes it effectively worth more that 50c today. It is a payment to be made, not money to be received, in 18 months, so in effect PV is greater? Interest free money loaned today must be worth more than when it must be paid back in 18 months

Sorry Biker but CJ's approach is the correct one as to valuation. The 50c liability in 18 months is only worth 45c today so Meridian is trading as worth $1.55 or thereabouts.

Think of it like this - if you have to pay me 50c in 18 months how much would I accept if you were to settle the debt now = c. 45c as I can then invest that 45c and it would be worth 50c in 18 months time.

[CJ]

50c to pay on a share in 18 months in my mind makes it effectively worth more that 50c today. It is a payment to be made, not money to be received, in 18 months, so in effect PV is greater? Interest free money loaned today must be worth more than when it must be paid back in 18 monthsYou need 45c now to make payment of 50c in 1 years time.

I think what you are saying is you get the benefit of that 50c for 18m but that benefit should be factored into the value of the IR. So if I had to pay 50c today rather than in 18 months, I would only pay 1.05 for the IR, not $1.10.

Can anyone else confirm bikers or my logic? EDIT - thanks Arbroath

[J R Ewing]

Well I'm still whinging my money was taken out on October 10th, and I just had a look at my account and it hasn't been refunded yet. it's an ANZ account so not some obscure place they had to refund it to.

That is almost certainly an ANZ issue rather than a Meridian one - ANZ had problems last night http://www.stuff.co.nz/business/industries/9341113/ANZ-glitch-hits-bank-payments

[minimoke]

So what about another factor. At the moment the. 50 is an outstanding debt and is 1/3 rd the listing value. Let's just say labour gets in at next election and the CA tanks to 0.50. Your debt is now 50% of the value. Would this change your valuation?

[blackcap]

I think people are making the mistake of trying to value MEL starting with the installment receipts. What you need to do is start with MEL the company and give the entity a valuation. Say $1.50 for arguments sake. Then try and work out for yourself what an installment receipt is worth. Now if the company is worth $1.50 in your eyes you see that you need to pay 50 cents in 18 months time. So what are you prepared to pay now for this installment receipt that effectively is a call option on the MEL share. Ok if I pay $1.00 +.50 = $1.50, I pay nothing for the 50 cents that I have effectively borrowed. So I am prepared to pay a bit more than $1.00 for my option. So I work out what this 50 cents is worth to me in the 18 months that I do not have to use it. I could bank this 50 cents at say 6% (mortgage interest rate seems appropriate enough) for 18 months and in todays dollars this is worth roughly 5 cents. So I am prepared to pay up to $1.05 for my installment receipt if I value the MEL entity at $1.50.
There are off course other factors at play but basically this is why the MELCA at 1.10 values MEL at roughly $1.55!

[CJ]

There are off course other factors at play but basically this is why the MELCA at 1.10 values MEL at roughly $1.55!Agree completely with your approach. (though I disagree with the use of the term 'call option' since it is a requirement, not an option)

The question therefore is what is the correct value for the share, not the installment.


So what about another factor. At the moment the. 50 is an outstanding debt and is 1/3 rd the listing value. Let's just say labour gets in at next election and the CA tanks to 0.50. Your debt is now 50% of the value. Would this change your valuation?Based on your fact scenario, the value of the share is only $1 due to Labour being in power, so working out the value of the IR from there, it is valued at ~50c since you still have 50c to pay.

[biker]

I think people are making the mistake of trying to value MEL starting with the installment receipts.....................basically this is why the MELCA at 1.10 values MEL at roughly $1.55!

Thanks Blackcap. Your post put it well. After thinking about it after my last post I had come up with similar reasoning but not as elegantly.
Thanks too Arbroath and CJ.

[blackcap]

Agree completely with your approach. (though I disagree with the use of the term 'call option' since it is a requirement, not an option)

T.

Thats right, it is a requirement isnt it. But what would happen if the MELCA's trade at under 0 cents then? Would you really pay up if the installment receipts "expired out of the money". Can anyone help as to what really would happen in this unlikely scenario?

Or do MEL come around with the debt collectors?

I do remember the old USB warrants on AIR, TEL etc would roll over into new ones with a lower "strike price" but yeah effectively you still had to pay up.

[CJ]

Or do MEL come around with the debt collectors? NOt sure if it is MEL or the Govt but some one does. If you dont exercise, they will sell on your behalf and then seek any shortfall from you. I guess this comes into play only if the IR trade below 50c as otherwise, they will recoup enough from the sale of the IR.

[QOH]

I remember the last lot of Infratil warrants I had, they just lapsed, were never offered to me at a cheaper price.