Since the proposed merger was announced in late October, both Port Otago and LPC have held their own counsel on the issue, which is considered a first move by any of New Zealand's port companies towards rationalisation within the over-serviced sector.
Port Otago's chairman, John Gilks, declined to comment last week on speculation of how a merger could work, while yesterday LPC chairman Rodger Fisher only reiterated the context of the joint-release from a fortnight ago.
"This, while only stage one of the process, is a significant step forwards in port rationalisation, a path we believe is imperative for the long-term sustainability of New Zealand ports," Mr Fisher told shareholders yesterday.
It appears that while the ports may gain strength from working together to service the larger but fewer vessels of the major international shipping lines, a merger could prompt the demise of trade volumes through smaller ports elsewhere.
Christchurch City Council is the majority 75% shareholder of listed-LPC and Port Otago the next largest, with a takeover blocking stake of 15.47%, while Port Otago is 100%-owned by the Otago Regional Council.
Mr Fisher said shipping line customers required specific infrastructure costing millions of dollars and the proposed "operational partnership"could potentially allow for co-ordinated port development.
A steering group representing both port companies had been established to consider all options, the interests of stakeholders and any legal obstacles, before making a recommendation.
Before Port Otago signs up to a merger, the regional council will have to decide on the matter.
For the full year to June, LPC delivered an after-tax profit of $10.3 million, a 7.3% increase on the pervious year.
Yesterday, Mr Fisher reiterated an earlier forecast for the present financial year, of another $10 million profit "plus or minus 5%", however, he noted the company was volume driven, had high costs and was not not immune to the rising effects of recession emanating from Europe, the United States, China and Australia.
"Economic conditions worldwide seem set to continue worsening and there appears to be no prospect of any immediate significant change to that situation," Mr Fisher said.
