The Government announced this month that iwi with as yet unsettled Treaty claims will be able to purchase shares floated as part of the Government's mixed ownership model programme of work "on account", to enable such iwi to participate in the initial public offerings even if their settlements have not been completed by the time of the offer. A purchase of shares will form part of an iwi's overall settlement package with the Crown. The opportunity is to apply to any initial public offering as part of the Government share offers programme that takes place within the next three years, and isn't limited to the Mighty River Power float.
The announcement is unrelated to the Māori Council's claims to Māori proprietary interests in water, and merely provides flexibility for iwi who would like to receive part-settlement of Treaty claims in shares rather than cash. The opportunity is subject to a number of limits and conditions, and does not represent a Government back-down over its recent announcement that it will not be progressing work on 'shares plus' options until after shares in the specified companies are sold. 'Shares plus' is a concept suggested by the Waitangi Tribunal, which would provide certain Māori interests with rights and powers above and beyond that enjoyed by other shareholders in relation to their stake in the relevant mixed ownership companies.
The main limits and conditions imposed on the credit sales to iwi can be summarised follows:
- Only iwi groups yet to complete their Treaty settlements will be eligible for credit sales (it is estimated that around 65 iwi groups may be eligible on this basis).
- Each iwi would be limited to purchasing shares to the maximum value of either 5 per cent, 10 per cent or 12.5 per cent of their estimated total settlement (as advised by the Office of Treaty Settlements), depending on their situation: up to 5 per cent would be available for iwi not “local” to any of the power companies’ assets; up to 10 per cent for iwi who are “local” to any of the companies; and up to 12.5 per cent for iwi who are “local” to any of the companies, have reached an Agreement in Principle with the Crown, and have already agreed a quantum amount for settlement.
- Eligible iwi must pay the full issue price, and any amount drawn down will be deducted from the final Treaty settlement reached with the Crown.
- Loyalty bonuses will continue to apply only to individual New Zealanders (iwi as a group will not be eligible for them).
- Iwi will have to wait for two years or until they have reached an Agreement in Principle with the Crown (whichever occurs later) before they will be able to sell their shares.
Finance Minister Bill English announced that "Even if all iwi take up their full entitlement and allocate all of it to the Mighty River Power share offer alone, it would still represent less than 5 per cent of the shares of Mighty River Power.” Treasury estimates that maximum uptake would amount to $145 million over the entire Government share offer programme.
Iwi who want to progress with the opportunity will need to work with the Office of Treaty Settlements. Some iwi may need to seek authority from their claimant community, others (in the latter stages of negotiations with the Crown) may simply need to express confirmation of their desire to take up the offer.