DCHL is a company that is 100% owned by Council. DCHL owns seven companies and 50% of Dunedin International Airport Limited.
The images shows the structure of the DCC and DCHL organisation
Dunedin CIty Council owns Dunedin City Holding Limited
Dunedin City Holdings owns 7 companies, Aurora, City Forests, Delta, Dunedin Stadium Property, Dunedin Venues, Dunedin Railways, Dunedin City Treasury and has 50% ownership of Dunedin Internatinal Airport.
DCHL’s purpose is to achieve the best for Dunedin from its investments. The principal activity of DCHL is to provide leadership and oversight of these companies on behalf of the ultimate shareholder, the Dunedin City Council. This is achieved via a Board of Directors with professional backgrounds including commercial operations, corporate finance and investments. Their role includes ongoing governance of the subsidiaries’ financial and non-financial performance with a view to maximising value for ratepayers. Aurora Energy is estimated to have the highest financial value in the DCHL portfolio.
Each year the Council writes a letter to DCHL setting out its requirements of the companies. This is called a Letter of Expectation.
For this current rating year, in the context of Council working on a draft investment plan, Council’s Letter of Expectation to DCHL included an expectation “to provide the Dunedin City Council with strategic options for consideration (including consideration as to the future composition and direction of the portfolio) that allows the Council to consider the implications for the Council as shareholder with a particular focus on dividends/return on investment from DCHL.”
DCHL thoroughly considered the Letter of Expectation with input from various expert advisors. After reviewing Council’s company portfolio, they identified Aurora Energy as the primary candidate for divestment (sale). Aurora Energy’s substantial scale and projected high capital expenditure, leading to escalating debt profiles, underpinned this decision. Their review included evaluating Aurora Energy’s forecast capital structure and exploring strategic options.
DCHL concluded that the case for selling Aurora Energy is compelling and there is likely to be strong market interest based on comparable transactions in New Zealand and Australia.
Why does DCHL need Council’s approval of a proposed sale?
Under the Companies Act 1993 and DCHL’s Statement of Intent, DCHL can only sell Aurora Energy if it obtains Council’s prior approval.