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GHL needs 'time to grow'

OUTGOING GHL chairman Bob Proudfoot has made a plea to Gisborne District Council to allow its fully-owned subsidiary, Gisborne Holdings Ltd, 10 years to grow its asset base.

Speaking at the annual meeting, he asked the council to treat GHL the same as it had Eastland Community Trust.

Making what he “cheekily called” the “chairman’s last word” he said the previous 18 months had seen the transfer of the Waikanae holiday camp and vehicle testing station to GHL, adding to the council chambers and various properties and leases, and the original Tauwhareparae Farms.

He was proud to advise that these entities and assets were all bedded in. GHL had rationalised its financial structure, having appointed a chief executive, Matt Feisst, and chief financial controller, Tracey Johnstone.

Accordingly, GHL was now in a position to concentrate on growing its asset base while preserving a strong balance sheet and increasing its annual distribution to the council to fund core infrastructure and “subsidise our fellow ratepayers’ rates demands”.

They could not have got to this position without the foresight of previous council CEOs and councillors to allow GHL to grow to its position, he said.

“It has taken longer than it should but we are getting there. Now, to really experience the benefits of the venture, GHL must be allowed to grow,” he said.

Eastland Community Trust was correctly afforded many years to accumulate a funding base before regular distributions were made to beneficiaries.

Annual distributionsGHL would make annual distributions to the council in accordance with its statement of intent, or better as it had done historically, unlike the situation for the trustees of ECT.

“But we do seriously advise councillors to grant us at least 10 years to take on and absorb the other entities the council has earmarked for transfer to GHL, and to allow GHL to mature its asset base and distribution potential.

“The sooner these assets are transferred, the sooner we can grow the assets and increase our distribution to GDC.

“Remember, the assets are still 100 percent owned by GDC — same house, different room.”

ECT's annual distributionECT made its annual distribution to those entities and in the quantities the trustees decided in accordance with the trust deed. GHL must distribute 100 percent of its distributable fund to its shareholder GDC for its sole discretion to decide what it would spend the money on.

“Both entities have a beneficial part to play in the wellbeing of Gisborne Inc, Tairawhiti.” said Mr Proudfoot.

“ECT is mature with considerable annually regenerating funds for distribution. Hopefully distribution policies can be altered to allow a set sum to be provided to fund community infrastructure items like the pool , library, walkways, and navigations project.

“GHL needs time to mature to grow its annual distributions to service core infrastructure on a long term basis for GDC, for example water, wastewater, sewerage and roading.”

A prime immediate example was the Waipaoa Floodbank scheme which required $17.5 million. That could be funded by GHL’s minimum distribution now of $1.5 million over 20 years.

“Long term funding is something we need to look at very seriously. $2.5 million given to fund these assets would service $30 million over 20 years at 5.5 percent. These are just worked on table mortgage rates and principal and interest repayments, there ae more efficient ways of repayments and structures like that. “

This was an example of the ability GHL would have if there was enough money put aside to service those debts, Mr Proudfoot said.