CHI - Channel Infrastructure Ltd (NZR)

[BlackPeter]

Announced capital raising, managed to place already $48 Million and offering existing shareholders as well a piece of the cake (@ $1.68 per share)

https://www.nzx.com/companies/NZR/announcements/247723

Interesting (and in my view clever) move. Mr. Market seems to like it as well. Their balance sheet looked o.k. prior to the capital raising, but still healthier after - and this gives them the backing for the predicted difficult year to come.

Two big expansion projects expected to deliver in 2014 and 2015; Lower NZ dollar (or actually higher US) as well as an increasing fuel demand (economic cycle still pointing upwards) should bring them back to making money.

Discl: Now holding ...

[macduffy]

Required reading for NZR shareholders.

http://www.nzherald.co.nz/business/n...ectid=11252520

I gave up on this company - for which I had a sentimental attachment dating back to the 1960's IPO! - some time ago.

[Goldstein]

Required reading for NZR shareholders.

http://www.nzherald.co.nz/business/n...ectid=11252520

I gave up on this company - for which I had a sentimental attachment dating back to the 1960's IPO! - some time ago.

Don't think I'd go near it with a barge pole after reading that. It raises some interesting questions though. IF NZR wasn't offering cheap refining to the main 'shareholders' what would happen to the price at the pump in NZ?

[macduffy]

Don't think I'd go near it with a barge pole after reading that. It raises some interesting questions though. IF NZR wasn't offering cheap refining to the main 'shareholders' what would happen to the price at the pump in NZ?

Would it make much difference though if the result was less refining in NZ and more refined product being imported? The refining business is highly competitive internationally - eg, Z Energy, for one, currently sources much of its fuel from Singapore. Perhaps its more a case of higher NZ refining costs requiring a "subsidy" in favour of the fuel retailers to justify continuing refining in NZ. That, and the security of supply question.

[BlackPeter]

Amazing - just received my voting pack in the mail and realized that returning my voting instructions by return mail is already too late (needs to be back by Tuesday - unlikely with NZ Post). No Internet voting option and no email option - and I have no access to an old fashioned fax machine.

Scanned the voting paper and send them with an email, but not too hopeful they will accept this delivery - shall see.

Are there any legal requirements on them how much time they need to give shareholders to vote?

Anybody else in a similar position - i.e. was it NZ Refining sending the pack out late, or was it NZ Post delivering them late to my address?

[Goldstein]

Would it make much difference though if the result was less refining in NZ and more refined product being imported? The refining business is highly competitive internationally - eg, Z Energy, for one, currently sources much of its fuel from Singapore. Perhaps its more a case of higher NZ refining costs requiring a "subsidy" in favour of the fuel retailers to justify continuing refining in NZ. That, and the security of supply question.

Who should be paying the 'subsidy' though? Currently it seems as though the non-oil-cartel shareholders of NZR are footing the bill through lost earnings.

Your right about the security of supply. As the demand for crude goes up there is usually a squeeze on global refining capacity.

[Vaygor1]

Who should be paying the 'subsidy' though? Currently it seems as though the non-oil-cartel shareholders of NZR are footing the bill through lost earnings.

Your right about the security of supply. As the demand for crude goes up there is usually a squeeze on global refining capacity.

Historically you are correct about the bottleneck on global refining capacity Goldstein, but from here on in I would be surprised if we ever encounter this bottleneck again as detailed in my post 16 months ago here:
http://www.sharetrader.co.nz/showthr...ht=#post389620

Regarding the 'subsidy' issue I don't see any of it making too much difference:
Cheap refining equals bad for NZR shareholders & good for NZR customers
Expensive refining equals good for NZR shareholders & bad for NZR customers.
But NZR primary shareholders are also NZR's primary customers… the one and the same.

So if you boil it down to very simple terms these dual shareholders/customers by-and-large come out the same whatever the refining margin. At the same time the setup provides a lovely mechanism for them to 'dial a profit'… and while they are allowed to continue doing that, they will keep the refinery open for business.

Disc: Do not hold. Sold out at $7.99 a long time back.

[Under Surveillance]

Amazing - just received my voting pack in the mail and realized that returning my voting instructions by return mail is already too late (needs to be back by Tuesday - unlikely with NZ Post). No Internet voting option and no email option - and I have no access to an old fashioned fax machine.

Scanned the voting paper and send them with an email, but not too hopeful they will accept this delivery - shall see.

Are there any legal requirements on them how much time they need to give shareholders to vote?

Anybody else in a similar position - i.e. was it NZ Refining sending the pack out late, or was it NZ Post delivering them late to my address?

The notice of meeting was lodged with NZX on 1 May 2014: https://www.nzx.com/companies/NZR/announcements/250005
A curiosity is that the notice gives the time of the meeting as 2.00 pm, and tells the punters a light lunch will follow. The material attached to it says they'll get afternoon tea. Contradictions like that don't give confidence that the front office would be on the ball with the mailing.
I don't hold, and would not touch. I see the 2 independent directors oppose Halliwell's motion, in a contemptuous manner. I don't know whether they are or were people of substance; one can see that independent directors on the RAK board who were once respected, Mogridge and Irvine, continue to go along down the slide with the Robinsons. If Halliwell's arguments have anything to them the Shareholder's Association will presumably get behind him.

[BlackPeter]

why would you bother voting when NZ refining is majority owned by self serving cartels.

True ... though to be honest, even for other companies without majority shareholders (or "self-serving" cartels in the majority) it seems to be nearly impossible for small shareholders to get rid of unloved directors or to get an election result not supported by the board.

However - it is normally possible to give the board at least a signal, but NZR does not even seem interested to give shareholders a realistic chance to exercise their legal rights to vote.

[macduffy]

Historically you are correct about the bottleneck on global refining capacity Goldstein, but from here on in I would be surprised if we ever encounter this bottleneck again as detailed in my post 16 months ago here:
http://www.sharetrader.co.nz/showthr...ht=#post389620

Regarding the 'subsidy' issue I don't see any of it making too much difference:
Cheap refining equals bad for NZR shareholders & good for NZR customers
Expensive refining equals good for NZR shareholders & bad for NZR customers.
But NZR primary shareholders are also NZR's primary customers… the one and the same.

So if you boil it down to very simple terms these dual shareholders/customers by-and-large come out the same whatever the refining margin. At the same time the setup provides a lovely mechanism for them to 'dial a profit'… and while they are allowed to continue doing that, they will keep the refinery open for business.

Disc: Do not hold. Sold out at $7.99 a long time back.

I'd agree with most of that, Vaygor, except that the "cartel" shareholders' motivations for owning shares in a refinery have started to splinter a bit since Shell sold its retailing business to Z Energy. Unlike the others, Z doesn't have any upstream production to feed the refinery and will be more inclined to buy its refined product at the best price - offshore, if the economics so dictate.