Latest / Early Edition with Ryan Bridge / Oliver Mander: Shareholders Association CEO on Contact Energy announcing a capital raise

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Oliver Mander: Shareholders Association CEO on Contact Energy announcing a capital raise · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: So reporting season underway, Contact Energy posting a halfier net
• 0:03
  Speaker 1: profit increase of forty four percent to about two hundred
• 0:05
  Speaker 1: million bucks yesterday. At the same time, they're announcing a
• 0:08
  Speaker 1: surprise capital raise half a billion dollars they want renewable
• 0:12
  Speaker 1: energy investment. Oliver Amanda is shareholders Association's CEO with me now, Oliver,
• 0:17
  Speaker 1: good morning, Good to have you on the program. Was
• 0:21
  Speaker 1: this a surprise for you?
• 0:24
  Speaker 2: In all honesty, it probably wasn't. A yes, I'm out
• 0:27
  Speaker 2: in a bit of a limb around that. But the
• 0:29
  Speaker 2: sector has well signaled a large amount of capital required
• 0:33
  Speaker 2: for new generation as it's in New Zealand, and that's
• 0:35
  Speaker 2: also driven by contacts and strategy to invest more renewable
• 0:39
  Speaker 2: energy projects and also of course that that wider concepts
• 0:42
  Speaker 2: of dead decarbonization. So look, in all honesty, no, I
• 0:47
  Speaker 2: think where I don't think Contact will be the last.
• 0:50
  Speaker 2: We'll probably probably see other capital raises coming up later
• 0:53
  Speaker 2: in the year. We're also really interesting to note for
• 0:55
  Speaker 2: us last last year the government actually signaling that they
• 0:58
  Speaker 2: would be willing to support further capital equity injection into
• 1:03
  Speaker 2: three mixed ownership companies and it's Genesis already and merch
• 1:06
  Speaker 2: area as well. So no, for me, not a surprise,
• 1:10
  Speaker 2: probably a surprise for many analysts, given that Contact have
• 1:14
  Speaker 2: previously signaled that it could meet those investments out of
• 1:17
  Speaker 2: its own cash flow. But obviously the advanced to some
• 1:20
  Speaker 2: projects means that they have a need to look to
• 1:23
  Speaker 2: raise capital on the market.
• 1:25
  Speaker 1: And if you're an existing shareholder, what do you do
• 1:27
  Speaker 1: with this information because it kind of dilutes your equity,
• 1:29
  Speaker 1: doesn't it?
• 1:30
  Speaker 2: It does, look I think the important thing is that
• 1:32
  Speaker 2: you make an active decision. It is a share purchase plan,
• 1:36
  Speaker 2: so there's no value to be gained as a shareholder.
• 1:38
  Speaker 2: But by simply doing nothing, you actually have to look
• 1:41
  Speaker 2: at your own situation say is this to me? Is
• 1:43
  Speaker 2: this something I want to invest? Further in the nature
• 1:46
  Speaker 2: of the rays means that the and there is some
• 1:50
  Speaker 2: dilution attached that you're quite right. I think it's somewhere
• 1:52
  Speaker 2: but about six percent overall, depending on what the actual
• 1:57
  Speaker 2: final placement price will be. But there's an offset for
• 2:04
  Speaker 2: a shareholder by saying, do I put money up now
• 2:06
  Speaker 2: and then receive the value for that back in future dividends,
• 2:10
  Speaker 2: or do I actually say, okay, now I'm going to
• 2:14
  Speaker 2: not put money out now and obviously reduce a slightly
• 2:17
  Speaker 2: reduced dividends flow in future. Actual value the share is
• 2:19
  Speaker 2: really interesting because this is a raise focused on growth
• 2:23
  Speaker 2: and that's not something at the scale that New Zealand
• 2:25
  Speaker 2: market has seen for quite some time. All those recent
• 2:28
  Speaker 2: capital raises have really been around with storing companies balance sheet,
• 2:32
  Speaker 2: so this is the first one for a while it's
• 2:33
  Speaker 2: actually focused on value recreative or growth investment, which is
• 2:37
  Speaker 2: quite a slightly different equation for shareholders.
• 2:39
  Speaker 1: Which is kind of nice too, Oliver. It means they've
• 2:41
  Speaker 1: got their eyes up looking at the horizon. At least.
• 2:43
  Speaker 1: I appreciate your time this morning, Olive Amanda from the
• 2:45
  Speaker 1: Shareholders Association.
• 2:47
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• 2:50
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• 2:53
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