WEBVTT - Meridian Energy's $91M takeover bid for NZ Windfarms 0:00:00.080 --> 0:00:03.040 The onshore wind resource in New Zealand is the best 0:00:03.080 --> 0:00:05.000 in the world. We think it's the best wind site 0:00:05.000 --> 0:00:07.400 in the country. Most other wind farms in New Zealand 0:00:07.480 --> 0:00:10.080 thirty five to forty forty five. Maybe this is fifty 0:00:10.119 --> 0:00:12.920 percent plus, so's it's an exceptional wind sit. 0:00:13.240 --> 0:00:15.680 It's an independent wind generator, so it's not tied to 0:00:16.360 --> 0:00:19.520 the gentailis for example. It's also a pure play on 0:00:19.640 --> 0:00:20.280 wind energy. 0:00:20.360 --> 0:00:24.000 Of climate change, we're likely to get more rain into 0:00:24.040 --> 0:00:27.240 where the hydro catchments are in this country and more 0:00:27.320 --> 0:00:30.160 wind into those areas that we're building wind farms. 0:00:33.720 --> 0:00:36.839 Curer and welcome to shed Lunch, brought to you by Shasis. 0:00:37.240 --> 0:00:40.279 I'm Helen Madison, and today we take a look at 0:00:40.280 --> 0:00:43.520 the takeover offer for New Zealand Wind Farms by Gen 0:00:43.640 --> 0:00:48.080 Taylor Meridian. If you haven't heard, this share offer represented 0:00:48.440 --> 0:00:51.920 a value of ninety one million dollars and a premium 0:00:51.960 --> 0:00:54.520 of one hundred and seven percent to the company's share 0:00:54.560 --> 0:00:57.440 price at the close of trading on febru the eighteenth. 0:00:58.040 --> 0:01:00.600 There are a number of things riding on this, including 0:01:00.600 --> 0:01:04.240 a shareholder vote in May and High court approval. Are 0:01:04.280 --> 0:01:06.399 we talking to both the chair of New Zealand Wind 0:01:06.440 --> 0:01:10.480 Farms Craig Stobo and Meridium CEO Neil Barclay to get 0:01:10.480 --> 0:01:14.240 the picture for investors about what the steel means. Before 0:01:14.240 --> 0:01:16.640 we get started, here's some important information. 0:01:17.440 --> 0:01:20.039 Investing involves the risk you might lose the money you 0:01:20.080 --> 0:01:23.400 start with. We recommend talking to a licensed financial advisor. 0:01:24.080 --> 0:01:27.920 We also recommend reading product disclosure documents before deciding to invest. 0:01:28.200 --> 0:01:30.600 Everything you're about to see and here is current at 0:01:30.600 --> 0:01:31.440 the time of recording. 0:01:32.040 --> 0:01:34.000 Welcome Craig. Great to have you in the studio, Thanks 0:01:34.000 --> 0:01:34.480 for coming in. 0:01:34.600 --> 0:01:35.880 Good morning to you, Thank you for having me. 0:01:36.520 --> 0:01:39.640 Now, the market seems to have quite liked the Meridian 0:01:39.720 --> 0:01:42.800 offer for New Zealand Wind Farms. The share price doubled. 0:01:43.160 --> 0:01:45.440 Probably fair to say it's been in the doul drums 0:01:45.480 --> 0:01:47.840 a little. Did you have any idea what to. 0:01:47.840 --> 0:01:51.760 Expect, well know, in the sense of how the market 0:01:51.800 --> 0:01:54.000 would exactly react, But you're right. It went from twelve 0:01:54.040 --> 0:01:56.920 point one cents the day before then the announcement was 0:01:56.920 --> 0:01:59.480 twenty five cents, and it sprint it up to around 0:01:59.560 --> 0:02:01.600 twenty three twenty three and a half, so one hundred 0:02:01.600 --> 0:02:04.920 and seventy percent from the day before. But of course 0:02:04.960 --> 0:02:07.880 the market then takes a view on the certainty of 0:02:07.880 --> 0:02:10.680 that transaction, so they don't quite go to twenty five cents. 0:02:10.680 --> 0:02:12.520 They go to twenty three to twenty and a half 0:02:12.639 --> 0:02:15.880 until they get more information, which is still forthcoming. So 0:02:16.000 --> 0:02:18.640 expect the share price to hang around the until we 0:02:18.680 --> 0:02:19.800 get certainty of the outcome. 0:02:20.240 --> 0:02:23.280 We've got about twenty thousand investors on shares ease, which 0:02:23.400 --> 0:02:25.560 is about twelve percent. I think of your register, which 0:02:25.600 --> 0:02:29.080 is a fair chunk for a retail block. What do 0:02:29.120 --> 0:02:32.360 you think they brought into New Zealand wind Farms. There's 0:02:32.400 --> 0:02:34.359 quite a few loyal people that have been there for 0:02:34.440 --> 0:02:36.600 quite sometime. Why do you think it was attractive? 0:02:37.240 --> 0:02:39.359 I think people came in with a couple of reasons. 0:02:39.360 --> 0:02:41.960 One is it's an independent wind generator, so it's not 0:02:42.000 --> 0:02:45.440 tied to the gent tailors for example. It's also a 0:02:45.440 --> 0:02:49.200 pure play on wind energy, and it's close to people. 0:02:49.240 --> 0:02:52.320 You can see the site, you can see the changes 0:02:52.360 --> 0:02:54.400 that are going on, and it's a very small company 0:02:54.480 --> 0:02:57.600 and it's pretty much four directors and roughly twelve staff, 0:02:57.639 --> 0:03:00.240 so it's you can wrap your head around what they're 0:03:00.240 --> 0:03:02.600 trying to do. It's pretty simple to understand. People came 0:03:02.639 --> 0:03:05.320 in Originally all of them have come in for the dividends, 0:03:05.800 --> 0:03:07.920 but we signaled a couple of years ago that we 0:03:07.919 --> 0:03:11.560 were moving into a development mode and we ceased paying dividends. 0:03:11.560 --> 0:03:14.080 That upset a few of our investors, including the Chares. 0:03:14.080 --> 0:03:16.720 These investors but were very clear that we could not 0:03:16.800 --> 0:03:20.000 stay where we were. We had to redevelop the existing 0:03:20.480 --> 0:03:24.040 two blade turbines. As they age and they don't have 0:03:25.280 --> 0:03:27.480 a management contract, we can go and get new parts 0:03:27.520 --> 0:03:32.040 because it's original technology which finishes and ceases. We's out 0:03:32.360 --> 0:03:35.560 in the twenty thirties or thereabout, so we had to 0:03:35.600 --> 0:03:38.440 make a decision to refurbish those or to go for 0:03:38.480 --> 0:03:40.920 a larger development, and we went for a larger development, 0:03:41.080 --> 0:03:44.760 and hence we paused dividends and then announced this major 0:03:44.800 --> 0:03:48.800 transaction with Meridian as our partner, which gave you one 0:03:48.840 --> 0:03:51.400 confidence that the pathway could be achieved with a very 0:03:51.400 --> 0:03:55.400 good partner and availability of capital and project expertise. 0:03:55.640 --> 0:03:57.880 So it's just clarify there. So you've got a joint 0:03:57.960 --> 0:04:03.320 venture with Meridian to repower extend to really Hoe. Now 0:04:03.360 --> 0:04:07.240 to really Hoe is your biggest asset pretty much, and 0:04:07.280 --> 0:04:10.120 obviously what Meridian will get all the energy from you know, 0:04:10.160 --> 0:04:13.880 once it's redone. Now that's that's a pretty big undertaking 0:04:14.160 --> 0:04:16.640 and you needed, obviously their help to do that. I 0:04:16.680 --> 0:04:20.440 think it's over six hundred million. Would this upgrade be 0:04:20.560 --> 0:04:21.720 possible without. 0:04:21.400 --> 0:04:28.200 Meridian and our view know, because we're at that stage, 0:04:28.240 --> 0:04:32.000 a forty million dollar valued company on the New Zealand 0:04:32.000 --> 0:04:35.240 Exchange with a five to fifty million dollar project in 0:04:35.240 --> 0:04:38.920 front of us. So we needed partners at several levels. 0:04:38.920 --> 0:04:42.240 We needed partners who would agree to buy the power 0:04:42.320 --> 0:04:43.880 at the end of the project, which is called a 0:04:43.880 --> 0:04:47.280 power purchased agreement a PPA. And we needed someone to 0:04:47.360 --> 0:04:50.240 co invest with us in the project. So needed to 0:04:50.279 --> 0:04:54.120 be someone who could guarantee the power off take at 0:04:54.120 --> 0:04:56.599 the end and who had the skills to help develop 0:04:56.640 --> 0:04:59.560 the project. As that decision was made, we went to 0:04:59.680 --> 0:05:03.279 an ur request for proposals to the marketplace and Meridian 0:05:03.360 --> 0:05:07.760 came back worth a ten plus five off take agreement 0:05:07.760 --> 0:05:09.120 for the power at the end of the project. 0:05:09.279 --> 0:05:11.120 What does that mean? Ten plus five so ten. 0:05:11.040 --> 0:05:14.040 Years plus five more years, so fifteen years of guaranteed 0:05:14.080 --> 0:05:16.000 off take of the power from the. 0:05:16.080 --> 0:05:18.280 And that's all of the powers. 0:05:18.640 --> 0:05:21.360 And that's really important because if you get a credit 0:05:21.400 --> 0:05:25.960 worthy purchaser of the power generated by the site. When 0:05:25.960 --> 0:05:29.200 the project starts for ten to fifteen years, it means 0:05:29.200 --> 0:05:32.160 it's very bankable as a project. So banks are saying, well, 0:05:32.160 --> 0:05:35.159 i've got security of revenue coming through, I'm happy to 0:05:35.160 --> 0:05:37.279 make a loan to the company or the JV in 0:05:37.279 --> 0:05:40.039 this case to be able to facilitate the development of 0:05:40.040 --> 0:05:43.200 the project. And so those projects can be quite highly geared, 0:05:43.720 --> 0:05:45.320 so you can have a lot of debt in those 0:05:45.360 --> 0:05:48.800 projects because of the security of that revenue stream. So 0:05:48.839 --> 0:05:51.440 that was very, very important. In addition, the partner had 0:05:51.440 --> 0:05:54.840 to demonstrate that they could develop the wind farm with us, 0:05:54.920 --> 0:05:58.400 and as it turns out, Meridian had been completing Harder 0:05:58.480 --> 0:06:01.640 Pucky further up the Spine North Island with another wind 0:06:01.680 --> 0:06:04.039 farm development, so they had credentials in development and they 0:06:04.080 --> 0:06:07.000 knew the logistics of trying to get a new farm 0:06:07.440 --> 0:06:09.960 or extension up and running. And at the same time 0:06:10.320 --> 0:06:12.159 they said, well, we'll do all that, but we'd like 0:06:12.200 --> 0:06:14.640 to buy nineteen point nine to nine percent of the 0:06:14.680 --> 0:06:17.880 shares in your company. So we issued new shares with 0:06:17.920 --> 0:06:20.640 the Concenter shareholders to allow them to come in and 0:06:20.680 --> 0:06:24.800 become a real partner. Across several layers, and so they 0:06:24.839 --> 0:06:27.520 are able to provide us for the expertise for that 0:06:27.640 --> 0:06:30.440 part of the project for their fifty percent, then we 0:06:30.440 --> 0:06:33.359 had our fifty percent, which is still a big amount 0:06:33.400 --> 0:06:35.520 of money for us to raise. So we were in 0:06:35.560 --> 0:06:40.760 the project process of also inviting equity participants to come 0:06:40.760 --> 0:06:43.919 in from around the world, and we've got amazing responses 0:06:43.960 --> 0:06:46.320 for those, and so we're going down the track of 0:06:47.120 --> 0:06:52.240 looking at crafting the final terms of what the equity 0:06:52.240 --> 0:06:55.279 providers could give to us. When Meridian popped up and said, well, 0:06:55.320 --> 0:06:58.279 actually we like the whole thing, so can we buy 0:06:58.360 --> 0:07:01.880 all of your shares please twenty five cents And we 0:07:01.920 --> 0:07:04.159 announced that to the market after we've done our own 0:07:04.560 --> 0:07:08.760 internal thinking about what was a fair price for the 0:07:08.800 --> 0:07:11.080 company and what was in the best interest of our 0:07:11.160 --> 0:07:14.960 shareholders because we have choices to stay and develop with 0:07:15.000 --> 0:07:17.400 all the risks associated with that, or we can take 0:07:17.440 --> 0:07:20.680 a price today which recognizes all the work that the 0:07:20.760 --> 0:07:23.880 board and the management team had done to get to 0:07:23.960 --> 0:07:26.560 this point, which was around all the risks that have 0:07:26.640 --> 0:07:29.480 to be managed and then the logistics to get to 0:07:29.760 --> 0:07:32.760 a final investment decision. And when you weigh those two 0:07:32.800 --> 0:07:35.080 things up, the board decided that it was in the 0:07:35.120 --> 0:07:38.640 best interests of shareholders to take the money today twenty 0:07:38.640 --> 0:07:41.520 five cents, so that's why the share price jumped so 0:07:41.600 --> 0:07:44.480 quickly from twelve point one to roughly twenty three cents today. 0:07:44.920 --> 0:07:46.640 So we have to go through a few things though, 0:07:47.080 --> 0:07:49.880 to get to that shareholder vote, which is required. We 0:07:49.920 --> 0:07:53.640 need to get an independent appraisal so evaluation report, which 0:07:53.640 --> 0:07:57.320 would tell us tell us the company, the board and 0:07:57.520 --> 0:08:00.600 shareholders that this is in the best of the company 0:08:01.000 --> 0:08:04.240 because the share price offered reflects the value that the 0:08:04.320 --> 0:08:07.320 valuer thinks company's worth, and they'll give us a range, 0:08:07.320 --> 0:08:09.960 I assume, like they do with other reports. A. Secondly, 0:08:10.080 --> 0:08:12.600 we've got to go through a process that's signed off 0:08:12.600 --> 0:08:14.960 by the court, so you have certain documentation you have 0:08:15.000 --> 0:08:16.960 to get out and we hope to get that out 0:08:17.240 --> 0:08:19.360 in the next few weeks and then there'll be a 0:08:19.360 --> 0:08:24.800 shareholder vote, hopefully in duing quarter. We're going as fast 0:08:24.800 --> 0:08:28.360 as we can, but that's the current timetable. So yes, 0:08:28.480 --> 0:08:31.120 it's it's a it's a process of thinking about your 0:08:31.120 --> 0:08:33.600 shareholders and what's in their best interests. 0:08:33.559 --> 0:08:36.040 And you think this is better for them, I mean, 0:08:36.040 --> 0:08:38.679 you will be no longer the last or you will 0:08:38.679 --> 0:08:40.360 be the last independent. 0:08:40.240 --> 0:08:41.880 Well, and it's not. It's not quite it's quite not 0:08:42.000 --> 0:08:44.360 quite true. I mean, there's several ways to think about this. 0:08:44.440 --> 0:08:48.000 The project keeps going. It's just done by Meridium, so 0:08:48.200 --> 0:08:50.800 you know, in terms of the generation needs of the country, 0:08:50.880 --> 0:08:53.160 it continues, it's just not done by New Zealand wind farms. 0:08:54.559 --> 0:08:57.640 But in terms of other independence, there's obviously the Manua 0:08:58.200 --> 0:09:04.880 are independent but are subject to it's a Commerce Commission issue, clearly. 0:09:04.960 --> 0:09:07.240 But there's also Pioneer Energy in the South Island. I mean, 0:09:07.280 --> 0:09:09.800 so there are independents around there are still Okay, yeah, 0:09:10.280 --> 0:09:12.280 they're not listed. It's like it's probably what you're trying 0:09:12.320 --> 0:09:15.800 to say is that we don't have many listed independent 0:09:18.120 --> 0:09:22.000 renewable enerjury companies, but there are privately owned renewable companies 0:09:22.000 --> 0:09:24.559 in the for example, the solar space, and if you 0:09:24.600 --> 0:09:26.520 look at the Transper website, there is a long list 0:09:26.559 --> 0:09:31.360 of possible projects yet to come to fruition. So I 0:09:31.360 --> 0:09:33.600 wouldn't rule out the possibility of others coming to the 0:09:33.600 --> 0:09:37.720 market if they think that's the best thing for a 0:09:37.720 --> 0:09:40.679 liquidity event. But you're right, at the moment we are 0:09:40.760 --> 0:09:44.560 the last independent listed one generator you know, so there's 0:09:44.640 --> 0:09:46.520 choices depending on your motivation to come up to New 0:09:46.600 --> 0:09:49.920 Zealand wind Farms. Was it the renewable play? Well, okay, 0:09:49.960 --> 0:09:51.480 you can continue with that. It's not going to be 0:09:51.520 --> 0:09:53.800 a small company play. It'll be the Meridian play, which 0:09:53.840 --> 0:09:57.320 is you know, it's a very large listed entity on 0:09:57.320 --> 0:09:57.920 the stocks change. 0:09:58.000 --> 0:10:00.319 Quite different. Yeah, Gentaylor compared to go. 0:10:00.360 --> 0:10:03.320 As Gentata, so it's combined. You're right, it's not a 0:10:03.360 --> 0:10:06.120 pure production play. It has retail as well. I know 0:10:06.120 --> 0:10:06.560 you're right. 0:10:06.880 --> 0:10:08.640 There are a few hopes to jump through. As you've 0:10:08.720 --> 0:10:12.199 just explained, what if it fails, what's the plan? So 0:10:12.280 --> 0:10:13.120 we've compilated that. 0:10:13.200 --> 0:10:15.680 So that would require us to go back to where 0:10:15.679 --> 0:10:19.760 we are today head of all this process, and that 0:10:19.800 --> 0:10:24.640 would mean well, our view is that if the twenty 0:10:24.640 --> 0:10:26.200 five cents is not an off of, the share price 0:10:26.200 --> 0:10:28.360 won't be at twenty three cents. So that's one thing. 0:10:28.600 --> 0:10:30.360 Of course, people are at the share prices at twenty 0:10:30.360 --> 0:10:32.360 three cents or so today because of the prospect of 0:10:32.400 --> 0:10:35.400 twenty five cents in Dune quarter, So that would change. 0:10:35.440 --> 0:10:37.960 I think secondly, we would have to go back to 0:10:39.320 --> 0:10:43.000 contemplating how we would raise dead inequity again. For our 0:10:43.040 --> 0:10:46.560 share of the project, and we've just in discussions with Meridian, 0:10:46.960 --> 0:10:50.280 agreed that if that was to happen, Meridian would fund 0:10:51.000 --> 0:10:53.960 our half of our fifty percent. So Meridian's got fifty 0:10:53.960 --> 0:10:56.280 percent of the project, we've got fifty percent. We need 0:10:56.280 --> 0:10:59.040 to fund half of our fifty percent, and so they've 0:10:59.080 --> 0:11:01.920 agreed for nine point eight million dollars to come in 0:11:01.960 --> 0:11:03.840 and fund that. Now that's not our view of the 0:11:03.960 --> 0:11:07.000 value of that slice of our business, but it's a 0:11:07.080 --> 0:11:10.200 backup so that we can fund what we need to do. 0:11:10.880 --> 0:11:12.800 But it does mean down the track we'll need to 0:11:12.800 --> 0:11:14.800 go to the sheer market again to raise more capital. 0:11:15.000 --> 0:11:16.520 Yeah, because that nine point eight. 0:11:16.320 --> 0:11:18.920 Million that covers us for our you know. 0:11:19.000 --> 0:11:21.160 We're near what's going to cost us it though. 0:11:21.520 --> 0:11:25.120 Well, it gets us, it gets us through the initial 0:11:25.480 --> 0:11:27.920 initial stages, but we still need we still need bank 0:11:28.120 --> 0:11:30.440 project debt, all those other things need to happen. So 0:11:30.840 --> 0:11:33.880 it's a it's a more difficult outcome in the sense 0:11:33.920 --> 0:11:37.199 that it doesn't value and our view value that fifty 0:11:37.200 --> 0:11:41.760 percent as much as the twenty five cents does. But 0:11:41.920 --> 0:11:44.800 it means we can continue and live another day and 0:11:44.880 --> 0:11:48.080 go out to the marketplace as we develop the other 0:11:48.200 --> 0:11:50.960 parts of our portfolio, how Nui in the South wai 0:11:51.040 --> 0:11:53.439 Rapa or other other development projects that are on the 0:11:53.440 --> 0:11:54.120 foot at the moment. 0:11:55.000 --> 0:11:57.520 So how Nui that was what you brought from Genesis 0:11:57.559 --> 0:12:00.720 back in October twenty twenty four. How does that compare 0:12:00.800 --> 0:12:01.120 to this. 0:12:01.960 --> 0:12:04.600 Well, it's another development opportunity in our view. So it 0:12:04.679 --> 0:12:09.320 has only twelve percent of the output of our current 0:12:09.440 --> 0:12:12.760 wind farm at to rehow so not the redevelopment one 0:12:12.800 --> 0:12:16.439 but the existing one. So it's small, but it has 0:12:16.520 --> 0:12:22.320 development possibilities to upgrade the existing Ennicon turbines and put 0:12:22.440 --> 0:12:26.679 and put more turbines on the same site. So we 0:12:26.720 --> 0:12:29.800 saw that as a great opportunity to improve the economics 0:12:29.840 --> 0:12:33.160 of that site. And it was an asset that Genesis 0:12:33.160 --> 0:12:35.360 clear didn't want and so I'm very happy to take 0:12:35.400 --> 0:12:38.920 it over, which was a great a great acquisition for 0:12:39.040 --> 0:12:41.360 us Q four last year. 0:12:41.480 --> 0:12:44.240 But doesn't Genesis get the power from that site? So 0:12:44.280 --> 0:12:46.520 what will happen if Meridian does well? 0:12:46.520 --> 0:12:48.840 They have a contract with us, so the contract stays. 0:12:48.640 --> 0:12:52.600 In place, right, So even though Meridian would potentially buy 0:12:52.720 --> 0:12:57.079 New Zealand wind farms, then they would be supplying Genesis 0:12:57.120 --> 0:12:58.319 with power. 0:12:58.080 --> 0:13:00.319 From that absolutely just. 0:13:00.280 --> 0:13:02.440 To finish off what would be your message for and 0:13:02.520 --> 0:13:05.120 using wind Farm investors. 0:13:05.880 --> 0:13:11.120 So at this point in our history of the company, 0:13:11.840 --> 0:13:14.000 we have a twenty five cent offer from Meridian in 0:13:14.000 --> 0:13:18.079 front of us to purchase all the shares from our 0:13:18.080 --> 0:13:21.400 shareholders at twenty five cents as we go through this 0:13:22.720 --> 0:13:26.640 scheme of arrangement process in that in the documentation that 0:13:26.640 --> 0:13:29.840 will be pros and cons given to investors around why 0:13:29.880 --> 0:13:32.280 you should or while you should not. But the question 0:13:32.360 --> 0:13:36.439 in our minds was the relative risks of both cash 0:13:36.480 --> 0:13:38.960 in the hand at twenty five cents, which we'll see 0:13:38.960 --> 0:13:41.439 what the independent value sees, but in our view as 0:13:41.480 --> 0:13:44.839 a fair price given all the work we've done today 0:13:45.000 --> 0:13:47.640 to get the developments up to this point in time, 0:13:48.600 --> 0:13:51.400 you could say there are other opportunities in front of 0:13:51.440 --> 0:13:54.199 us with the empowering and how Nui and our other sites, 0:13:54.600 --> 0:13:58.000 but there are also risks with those. Nothing is certain 0:13:58.160 --> 0:14:01.240 about the future. We haven't got to a final investment 0:14:01.280 --> 0:14:05.800 decision yet for Drury, how and that requires us to 0:14:06.000 --> 0:14:09.319 look at all the logistics of the repowering, the civil engineering, 0:14:09.320 --> 0:14:12.800 the electrical engineering, the new turbines taking down the old turbines. 0:14:13.120 --> 0:14:15.880 There's lots of things to happen, right, and there's always 0:14:16.200 --> 0:14:20.040 always risks for that outlook. So on balance, if the 0:14:20.200 --> 0:14:23.520 independent value agrees with us, then we think twenty five 0:14:23.640 --> 0:14:27.000 cents is a great outcome for our current shareholders and 0:14:27.160 --> 0:14:29.880 is unanimously supported by the Board of directors. 0:14:30.560 --> 0:14:33.440 And there's no white knights in the wings? Are there? 0:14:34.560 --> 0:14:36.920 If there are, the wings haven't flown to me, So 0:14:36.960 --> 0:14:37.840 I don't know. 0:14:40.160 --> 0:14:42.440 So Craig from New Zealand wind Farms says there are 0:14:42.440 --> 0:14:46.160 no white knights in the wings. Why is Meridian so keen? 0:14:46.960 --> 0:14:51.360 According to Meridian CEO Neil Barclay, it's a pretty spectacular sight. 0:14:52.040 --> 0:14:55.080 Plus for him, there's pressure to make this deal happen 0:14:55.360 --> 0:14:58.720 sooner than later. I sat down with Neil Barclay to 0:14:58.760 --> 0:15:02.760 give investors the Meridian perspective. Neil, welcome to the studio. 0:15:03.040 --> 0:15:05.440 Thanks hell you are leaving Meridian. I think at the 0:15:05.520 --> 0:15:08.400 end of June, when we think about this New Zealand 0:15:08.440 --> 0:15:11.240 Wind Farms scheme, if you like the in vestas are 0:15:11.240 --> 0:15:13.640 going to be looking at. Is this something you wanted 0:15:13.640 --> 0:15:15.160 to get across the line before you leave. 0:15:16.680 --> 0:15:19.800 Yeah, it is. Look, when you take on a CEO 0:15:19.920 --> 0:15:21.680 roll like mine, you don't. You don't do it to 0:15:21.760 --> 0:15:23.960 create some sort of legacy. You do it to sort 0:15:24.000 --> 0:15:26.920 of work with teams and do some good things. But 0:15:27.080 --> 0:15:29.680 of late I have started to look back and think 0:15:29.720 --> 0:15:32.600 about the legacy that I might be leaving behind. And 0:15:32.600 --> 0:15:35.200 there's some things I'm super proud of. I think the 0:15:35.240 --> 0:15:40.560 way we've developed our retail proposition and Meridian is our standing. 0:15:40.600 --> 0:15:43.440 We've grown our market share. We're almost double the size 0:15:43.440 --> 0:15:46.320 of the retail business in the last five six years. 0:15:47.400 --> 0:15:50.120 And in my time in the business, we've also built 0:15:50.160 --> 0:15:53.760 about six wind farms in New Zealand, couple in Australia, 0:15:54.400 --> 0:15:57.400 and with Teriri Ho we would have we would have 0:15:57.440 --> 0:16:01.280 produced enough new renewable energy to power about half a 0:16:01.280 --> 0:16:04.320 million homes and I think that's something that I'm very 0:16:04.320 --> 0:16:05.320 proud to leave behind. 0:16:05.640 --> 0:16:08.280 To very hope is the wind farm near Palmerston North, 0:16:08.280 --> 0:16:10.120 which is really the crown and the jewel for New 0:16:10.240 --> 0:16:14.160 Zealand wind farms. If that the steel goes through, what 0:16:14.200 --> 0:16:16.760 does that do for what Meridian has I think you've 0:16:16.800 --> 0:16:19.080 got about is it eight wind farms. 0:16:19.160 --> 0:16:21.640 We've got six operating wind farms in New Zealand at 0:16:21.640 --> 0:16:24.360 the moment. This would be our seventh, but it's also 0:16:24.400 --> 0:16:27.880 our largest, so it would increase the portfolio of wind 0:16:27.960 --> 0:16:32.880 assets by about thirty five percent. That's significant. New Zealand's 0:16:33.000 --> 0:16:36.920 Meridians largely are our hydro generator. Most of our generation 0:16:37.000 --> 0:16:40.160 assets are in the South Island, but this would bring 0:16:40.200 --> 0:16:42.440 our wind portfolio up to about twenty percent of our 0:16:42.440 --> 0:16:46.480 total generation. That's becoming quite meaningful. 0:16:45.760 --> 0:16:48.520 Is their plans to extend that even further. I mean, 0:16:48.560 --> 0:16:49.000 what's there. 0:16:49.280 --> 0:16:53.840 Yeah, absolutely, Look, we've got huge amount of renewable resources 0:16:53.840 --> 0:16:56.840 in this country and that's that's our future, that's our opportunity. 0:16:57.680 --> 0:17:01.800 So we've been working on build portfolio of options that 0:17:01.840 --> 0:17:04.159 we can develop, both wind, solar. We've even got a 0:17:04.160 --> 0:17:07.360 battery being built in North End right now. We expect 0:17:07.359 --> 0:17:09.640 to sign off on about a billion dollars of investment 0:17:09.720 --> 0:17:13.159 this this calendar year, which would include ter Aria and 0:17:13.240 --> 0:17:15.800 about three billion dollars by the end of this decade 0:17:16.240 --> 0:17:18.800 and about ten billion dollars by twenty fifty. Is part 0:17:18.800 --> 0:17:22.600 of our efforts to help decarbonize the New Zealand economy. 0:17:22.880 --> 0:17:25.720 Where does Soula fit with that? What's the ideal sort 0:17:25.760 --> 0:17:28.520 of percentage break down for those three types of energy? 0:17:28.760 --> 0:17:32.560 Well, I think hydro will remain the mainstay of the 0:17:32.560 --> 0:17:35.159 New Zealand electricity system. We're so lucky to have it. 0:17:35.160 --> 0:17:37.600 It's so flexible, it's it's you know, it's. 0:17:37.480 --> 0:17:42.399 The lately lags being down the lakes. 0:17:42.160 --> 0:17:44.400 Can move around a wee bit. But what we what 0:17:44.440 --> 0:17:47.280 we know is as we build out more wind, solar 0:17:47.359 --> 0:17:49.800 and the geo thermal that's been built is very helpful 0:17:49.840 --> 0:17:53.879 as well. The risk of hydro shortfall actually reduces because 0:17:53.880 --> 0:17:57.560 we've got a more diversified generation fleet around the whole country. 0:17:58.160 --> 0:18:01.359 So that's really our future now. Solar has a strong 0:18:01.400 --> 0:18:04.520 part to play. What we've been finding of late, interestingly 0:18:04.640 --> 0:18:08.160 but not too surprisingly, is when we have those high, 0:18:09.160 --> 0:18:11.760 very calm weather systems that don't bring the rain, they 0:18:11.760 --> 0:18:16.040 also don't bring the wind. Alternatively, solar is a really 0:18:16.040 --> 0:18:19.080 strong generation option at times like that. So we think 0:18:19.160 --> 0:18:22.359 solar complements wind, hydro and the GFM or we have 0:18:22.440 --> 0:18:25.000 in the system today and will ultimately get us to 0:18:25.040 --> 0:18:27.199 one hundred percent renewable electricity. 0:18:27.080 --> 0:18:30.679 Because how often would you need to rely on, say, thermal, 0:18:30.720 --> 0:18:32.639 which is sort of coal and gas, well it was 0:18:32.680 --> 0:18:33.960 gas for a while anyway. 0:18:35.160 --> 0:18:38.199 The amount of thermal generation in the New Zealand system 0:18:38.240 --> 0:18:43.280 has reduced from about well about thirty five percent of 0:18:43.280 --> 0:18:47.560 the total system needs fifteen years ago to about twelve 0:18:47.560 --> 0:18:51.119 percent today. So that's going down all the time. And 0:18:51.160 --> 0:18:54.480 we will burn less and less thermal fuel as we progress, 0:18:55.280 --> 0:18:59.880 as we build more wind, solar and decarbonize. But when 0:19:00.040 --> 0:19:02.600 we do need it, we really need it, yeah, and 0:19:02.640 --> 0:19:06.199 that's like last winter and like this coming winter. And 0:19:06.240 --> 0:19:08.960 we've got a problem in this country because investments slowed 0:19:08.960 --> 0:19:12.919 down in the gas and domestic gas. And that's unfortunate 0:19:12.960 --> 0:19:16.439 because domestic gas it was a lot more is a 0:19:16.440 --> 0:19:20.000 lot less carbon intensive than burning coal. But what what's 0:19:20.080 --> 0:19:22.280 occurred is the investment hasn't gone in. We've got a 0:19:22.280 --> 0:19:24.200 short full of gas, so we're actually having to burn 0:19:24.240 --> 0:19:28.280 more coal in times where we have low hydrome flows. 0:19:29.200 --> 0:19:31.560 We will manage through that. It's probably a two to 0:19:31.560 --> 0:19:34.439 three year sort of inch point, we're calling it. But 0:19:34.520 --> 0:19:37.880 as the new renewables, including projects like terrariy Hoe, come 0:19:37.920 --> 0:19:43.879 on stream, we'll start burning less coal again and just transition. 0:19:44.840 --> 0:19:47.240 It's inevitable we transition to close to one hundred percent 0:19:47.640 --> 0:19:50.840 electricity grit and that's going to happen probably overin the 0:19:50.920 --> 0:19:52.200 next fifteen years, next. 0:19:52.080 --> 0:19:55.359 Fifteen years, right, Yeah, because this last winter was tough, 0:19:55.480 --> 0:19:59.240 and even your interim results just recently that really showed 0:19:59.240 --> 0:20:01.440 that you had so hedging that you had to do 0:20:01.840 --> 0:20:04.359 because you didn't have that gas coming on stream, and 0:20:04.400 --> 0:20:06.240 you had to pay for that because you had a 0:20:06.240 --> 0:20:08.520 loss I think was one twenty one million net loss. 0:20:08.800 --> 0:20:10.760 Com me to say, you know, a profit of one 0:20:10.840 --> 0:20:15.800 hundred and ninety one million the year before, quite a 0:20:15.800 --> 0:20:19.360 big difference. Are you confident that, say investors looking at 0:20:19.400 --> 0:20:22.520 this now from the New Zealand wind farmer's perspective, that 0:20:22.600 --> 0:20:25.600 you can kind of mitigate that and not have quite 0:20:25.600 --> 0:20:27.400 the same thing happen or Yeah. 0:20:27.240 --> 0:20:32.240 Look, Meridian, we're a renewables only energy company. We rely 0:20:32.320 --> 0:20:34.640 on Mother Nature. So when it doesn't rain, we don't 0:20:34.680 --> 0:20:38.160 have the fuel to generate to meet our customer commitment, 0:20:38.240 --> 0:20:40.439