1 00:00:00,040 --> 00:00:03,280 Speaker 1: So reporting season underway, Contact Energy posting a halfier net 2 00:00:03,320 --> 00:00:05,800 Speaker 1: profit increase of forty four percent to about two hundred 3 00:00:05,840 --> 00:00:08,480 Speaker 1: million bucks yesterday. At the same time, they're announcing a 4 00:00:08,600 --> 00:00:12,640 Speaker 1: surprise capital raise half a billion dollars they want renewable 5 00:00:12,720 --> 00:00:17,120 Speaker 1: energy investment. Oliver Amanda is shareholders Association's CEO with me now, Oliver, 6 00:00:17,560 --> 00:00:21,800 Speaker 1: good morning, Good to have you on the program. Was 7 00:00:21,840 --> 00:00:22,920 Speaker 1: this a surprise for you? 8 00:00:24,160 --> 00:00:27,240 Speaker 2: In all honesty, it probably wasn't. A yes, I'm out 9 00:00:27,280 --> 00:00:29,080 Speaker 2: in a bit of a limb around that. But the 10 00:00:29,160 --> 00:00:33,519 Speaker 2: sector has well signaled a large amount of capital required 11 00:00:33,560 --> 00:00:35,720 Speaker 2: for new generation as it's in New Zealand, and that's 12 00:00:35,760 --> 00:00:39,000 Speaker 2: also driven by contacts and strategy to invest more renewable 13 00:00:39,080 --> 00:00:42,560 Speaker 2: energy projects and also of course that that wider concepts 14 00:00:42,600 --> 00:00:47,640 Speaker 2: of dead decarbonization. So look, in all honesty, no, I 15 00:00:47,680 --> 00:00:50,320 Speaker 2: think where I don't think Contact will be the last. 16 00:00:50,360 --> 00:00:53,160 Speaker 2: We'll probably probably see other capital raises coming up later 17 00:00:53,200 --> 00:00:55,520 Speaker 2: in the year. We're also really interesting to note for 18 00:00:55,560 --> 00:00:58,760 Speaker 2: us last last year the government actually signaling that they 19 00:00:58,760 --> 00:01:03,000 Speaker 2: would be willing to support further capital equity injection into 20 00:01:03,320 --> 00:01:06,559 Speaker 2: three mixed ownership companies and it's Genesis already and merch 21 00:01:06,560 --> 00:01:09,840 Speaker 2: area as well. So no, for me, not a surprise, 22 00:01:10,120 --> 00:01:14,880 Speaker 2: probably a surprise for many analysts, given that Contact have 23 00:01:14,959 --> 00:01:17,920 Speaker 2: previously signaled that it could meet those investments out of 24 00:01:17,959 --> 00:01:20,440 Speaker 2: its own cash flow. But obviously the advanced to some 25 00:01:20,560 --> 00:01:23,560 Speaker 2: projects means that they have a need to look to 26 00:01:23,720 --> 00:01:24,760 Speaker 2: raise capital on the market. 27 00:01:25,000 --> 00:01:26,959 Speaker 1: And if you're an existing shareholder, what do you do 28 00:01:27,000 --> 00:01:29,320 Speaker 1: with this information because it kind of dilutes your equity, 29 00:01:29,319 --> 00:01:30,520 Speaker 1: doesn't it? 30 00:01:30,520 --> 00:01:32,480 Speaker 2: It does, look I think the important thing is that 31 00:01:32,520 --> 00:01:36,000 Speaker 2: you make an active decision. It is a share purchase plan, 32 00:01:36,200 --> 00:01:38,480 Speaker 2: so there's no value to be gained as a shareholder. 33 00:01:38,880 --> 00:01:41,280 Speaker 2: But by simply doing nothing, you actually have to look 34 00:01:41,280 --> 00:01:43,200 Speaker 2: at your own situation say is this to me? Is 35 00:01:43,200 --> 00:01:46,560 Speaker 2: this something I want to invest? Further in the nature 36 00:01:46,600 --> 00:01:50,000 Speaker 2: of the rays means that the and there is some 37 00:01:50,080 --> 00:01:52,520 Speaker 2: dilution attached that you're quite right. I think it's somewhere 38 00:01:52,560 --> 00:01:56,320 Speaker 2: but about six percent overall, depending on what the actual 39 00:01:57,720 --> 00:02:04,080 Speaker 2: final placement price will be. But there's an offset for 40 00:02:04,080 --> 00:02:06,120 Speaker 2: a shareholder by saying, do I put money up now 41 00:02:06,640 --> 00:02:10,160 Speaker 2: and then receive the value for that back in future dividends, 42 00:02:10,280 --> 00:02:12,800 Speaker 2: or do I actually say, okay, now I'm going to 43 00:02:14,080 --> 00:02:16,960 Speaker 2: not put money out now and obviously reduce a slightly 44 00:02:17,000 --> 00:02:19,840 Speaker 2: reduced dividends flow in future. Actual value the share is 45 00:02:19,919 --> 00:02:22,799 Speaker 2: really interesting because this is a raise focused on growth 46 00:02:23,360 --> 00:02:25,880 Speaker 2: and that's not something at the scale that New Zealand 47 00:02:25,880 --> 00:02:28,400 Speaker 2: market has seen for quite some time. All those recent 48 00:02:28,440 --> 00:02:32,000 Speaker 2: capital raises have really been around with storing companies balance sheet, 49 00:02:32,040 --> 00:02:33,480 Speaker 2: so this is the first one for a while it's 50 00:02:33,480 --> 00:02:37,400 Speaker 2: actually focused on value recreative or growth investment, which is 51 00:02:37,480 --> 00:02:40,040 Speaker 2: quite a slightly different equation for shareholders. 52 00:02:39,720 --> 00:02:41,600 Speaker 1: Which is kind of nice too, Oliver. It means they've 53 00:02:41,600 --> 00:02:43,640 Speaker 1: got their eyes up looking at the horizon. At least. 54 00:02:43,760 --> 00:02:45,600 Speaker 1: I appreciate your time this morning, Olive Amanda from the 55 00:02:45,639 --> 00:02:46,720 Speaker 1: Shareholders Association. 56 00:02:47,760 --> 00:02:50,760 Speaker 2: For more from Early Edition with Ryan Bridge, listen live 57 00:02:50,880 --> 00:02:53,880 Speaker 2: to News Talks it be from five am weekdays, or 58 00:02:53,960 --> 00:02:55,840 Speaker 2: follow the podcast on iHeartRadio.