Another 1% in the shares of Lyttelton Port of Christchurch has been cribbed by its majority owner, the Christchurch City Council in a $2.43 million transaction.
The council's share rose from 78.12% to 79.12% during the past two days while the contentious five-year-old stake of rival Port Otago remained unchanged at 15.47% yesterday.
Craigs Investment Partners broker Peter McIntyre questioned why Port Otago retains the stake, given merger negotiations between the port companies ended earlier this year and it gave Port Otago no boardroom control.
Port Otago bought its stake in May 2006, paying a total $37 million, which acted as a blocking stake of more than 10%, to prevent a deal whereby Lyttelton would have been delisted and sold to a foreign port management company.
"It's an expensive blocking stake to hold," Mr McIntyre said.
With the Christchurch City Council taking every opportunity to "nibble away" at increasing its stake, Mr McIntyre believed there could be a "better use of Port Otago funds" elsewhere.
At yesterday's price of $2.25, Port Otago's stake was worth $35.6 million.
Port Otago chairman Dave Faulkner reiterated yesterday the stance of his predecessor John Gilks, in maintaining a "long-term hold" on the 15% stake, even with another dividend suspension announced after the February quake.
While the $37 million investment has reaped Port Otago a total $3.7 million in dividends, Mr McIntyre said the overall dividend yield was not exceptionally high - a net return of just over 2%.
"There may well be ways to put that investment to better use," he said.
During the ownership period Lyttelton had at times suspended some dividend payments, and while it can not release any funds to the Christchurch City Council separate to Port Otago, it can boost its own capital expenditure programmes or increase its cash reserves.
Negotiations dragged out over nearly two years between the southern ports, before the earthquake damage inflicted on Lyttelton in September and February prompted their cancellation.
