The government plans to sell 49% of Mighty River Power company very soon. Mighty River is an electricity company. New Zealanders who are interested in buying shares in this company need to pre-register their interest on-line. About 150,000 people have already pre-registered in the last two days. They will not know until later how much each share will cost so they don’t have to buy any if the price is too high. The minimum each person can spend is $1,000.
This is the beginning of the asset sales. Mighty River Power is a state-owned enterprise (SOE) so at the moment it is a government company which must operate like a private company to make a profit. Before the last election, the government said that it planned to sell 49% of some state assets. Many people are angry about this policy because these companies pay a dividend to the government each year; however, selling 49% will give the government between $5billion and $7bn immediately which will be used for schools and hospitals.
While the shares will be listed on both New Zealand and Australian stock markets, the government thinks that 85% to 90% of the shares will be bought by New Zealanders. If they keep the shares for two years, they will receive a bonus.
Listen to January 30th 2011 to hear more about asset sales.
Vocabulary
• pre-register – give their name to show they are interested in buying
• minimum – smallest number (opposite is maximum)
• asset – something you own like your house or car; the state (government) owns this company
• enterprise – company
• dividend – shares have to pay dividends from their profits every year or half a year
• listed on the stock market – available for people to buy and sell
• bonus – something extra