Friday, March 29, 2024

Big investor goes, others dig deep

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The off-again, on-again Waimea Dam has dodged the loss of its mystery $11 million backer with some of the existing irrigation investors reaching into their pockets to make up the difference.
Murray King will conclude 14 years’ service to co-operative
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“At the end of the day the terms were not acceptable and it made more sense for the existing investors to take up the unallocated shares,” Waimea Irrigators spokesman Murray King said.

A key concern of the group is the apportioning of risk, with the investor carrying less while Waimea Irrigators carried substantially more.

A group of 14 businesses will collectively buy 2000 convertible notes in Waimea Irrigation at $5500 a share, the same share price paid by the scheme subscribers.

The group will form a separate investor vehicle and over time realise their right to convert the notes into shares. The first conversion period is 10 years from the project’s start.

The names of the 14 businesses are confidential but all have interests related the scheme’s outcome and all are seeking water security, King said. 

Most have strong intergenerational links through the region’s primary sector. 

Four of the investors are members of the Waimea Irrigation board.

“There is no realistic Plan B for the region if the dam does not happen,” King said.

“Yes, large irrigators would likely find individual solutions at their own cost. 

“But small irrigators and small landowners would struggle. 

“The (Tasman District) council would have to find another solution for urban water supply, one that would be much more expensive to ratepayers.”

The original unnamed investor drew fire from dam critics for its confidentiality and the requirement it be paid $500,000 as an up-front fee for putting the $11.5 million of funds forward.

The investor vehicle will comprise no more than 20% of the voting rights in Waimea Irrigation, with conversion rights stretching over the first 15 years.

The project has been dogged with cost escalations and time delays and can’t be 100% certain until the money is banked, King said.

There also remain some other hurdles for the scheme to get over before the first sod is turned.

Parliament is hearing submissions on a local bill to enable the project to access some protected Conservation Department riparian land. 

Expectations are that it will pass through Parliament with most main parties supporting it.

Financial close-off comes in mid December when the council has a final review of costs and financing components and votes on continuing support.

Dam critic Brian Halstead believes there are also significant environmental challenges awaiting the project that have not been fully calculated into the scheme’s escalating cost. 

They relate to nutrient losses from intensification and will likely leave the project open to challenge in the Environment Court.

“What has also not been challenged is the efficiency in the storage scheme to help with aquifer recharge. We are still not 100% convinced it will actually recharge them.”

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