MEL - Meridian Energy

[mouse]

I attended a conference recently where a industry connected CEO shared his personal view that Tiwai would not be closed. He feels it is all bluster from Rio due to the high quality of product Tiwai produces and the huge commitments to close/re-open through a commodity cycle. Now arguably the commodity cycle is near the bottom and Rio have negotiated hard to lower their input costs but have still kept it open. Rio also have a track record, like BHP, and other large multi-nationals of negotiating hard for their interest so what did we expect to happen given the situation around the MEL float?

I agree with the CEO that Tiwai will be with us for the long-term unless the commodity price falls another 20-30%, which I admit it could. Real money is made when you call these situations correctly.....fingers crossed. And if does close MEL is well placed medium term to wear it and prosper.

What will happen first is that Rio will make an offer we cannot refuse to BUY Manapori. They will not walk away without a great struggle, from them, to get us to sell. All of our cash would then be returned to us, but we would have lost a major generation plant. Water is Gold.

[Beagle]

Anyone noticed the price of Aluminium has slipped from ~ $1,800 a ton too $U.S1,700 since this company was floated.
Also Labour / Greens seem to be getting stonger. From memory one of the lead brokers reckoned a Labour Greens power price intervention was worth approx 63 cents off the SP.

I think that could be what Snapiti is referring too with the Labour Greens "bus" that's coming.

Astute observers will have noticed the wholesale power prices across the country are already under intense downward pressure due to excess supply and we have negative power consumption trends from both business and retail customers and that's before we even start talking about the new generation capacity that's locked into coming on stream in the next year ot two. (Genesis Gas fired plant near Taupo being one example)....and yet for some strange reason people think the forcasted divdends outlined in the offer documments are cast in stone, go figure ? Perhaps they should have a chat with Chorus investors about how secure their divdends have turned out to be.
God only knows what happens to the wholesale power price if / when Rio Tinto pull the plug and there
s circa 14% of the entire nation's power supply as a further unallocated surplus, assumming Transpower can wire up another set of lines to transmitt it ?

Disc, don't own but wish it was easy to go short on this stock.

[vorno]

To quote Meridian Energy

"This is a long-term investment".

I'll like to see where this thread is at 10 years from now

[Beagle]

^^ Possibly higher than where it is today but perhaps more to the point, perhaps dramatically higher than where it will be in the near future when :-
a) If / When Labour Greens get into power and work their "majic" on retail power pricing
b) People, (who may already be heavily underwater on their investment) have to write another cheque for this stock for their second tranche of payment
c) If / when Rio Tinto announce they're closing the smelter and this company confirms it doesn't have the ability to supply the excess power to the national grid for another few years.

Granted if people stick their head in the sand for long enough and pretend everything's alright, it might all come out in the wash for them okay, eventually...

[Goldstein]

Are buyers picking up shares now under 1.00 getting all the entitlements that those who bought at the IPO were getting?

I thought the only entitlement was the fact that they are instalment receipts - or am I missing something?

So as I write this you can purchase MELCA for $0.90, with $0.50 payable in 18 months or whenever.

Note that the price is now sitting at 140/150 = 93% of IPO, NOT 90/100 = 90%. So has a way to go yet to match MRP

[vorno]

Are buyers picking up shares now under 1.00 getting all the entitlements that those who bought at the IPO were getting?

I believe I read a passage explaining that once instalments have traded hands on the market, their dividend rate gets slashed?
May need some clarity in this area, I might very well be mistaken.

[silu]

Are buyers picking up shares now under 1.00 getting all the entitlements that those who bought at the IPO were getting?

Yup that's how I see it.

[silu]

As I understand is that if you sell all your MELCA and then buy back you lose the price cap. But if you add to your IPO holding you get it.

[silu]

I'm confusing myself now. Who here has a personal broker they can ask?

[cyclist]

The retail price cap was $1.60. Since the IPO price was set lower at $1.50, I don't believe the retail price cap is relevant in any way now.