Photo: RNZ / Nate McKinnon
Four independent directors have quit the board of the company which manages the Christchurch City Council's commercial assets.
Christchurch City Holdings Limited board chair Abby Foote sent her letter of resignation to Mayor Phil Mauger yesterday.
She was joined by fellow directors Chris Day, Martin Goldfinch and David Hunt.
Foote cited the break down of the relationship between the board and the council, including its current management.
"We respect and support the right of council to make decisions around the city's assets. This includes its decision not to accept the CCHL board's recommendation in December 2023 to move to an active portfolio management model in order to invest in our region's assets, pay down debt and grow dividends," her letter said.
"However, the decisions council has subsequently taken over 2024 to maximise short-term dividends at the expense of paying down group debts and investing in the future of its companies has caused us to lose confidence in council's ability to responsibly own core strategic infrastructure.
"We do not believe we can meet our duties as directors to CCHL or the subsidiary companies in our care with the current demands that council is making of CCHL. We also cannot support the processes that have characterised the way this council increasingly operates as a business owner."
CCHL managed more than $3 billion of assets on behalf of the council, including Lyttleton Port, Christchurch International Airport and Orion.
The council appointed Foote as chair in April last year and she then assisted in appointing five other independent directors to sit alongside councillors Sara Templeton and Sam MacDonald.
The board sought the council's permission to actively manage its portfolio, buying and selling assets as it saw fit.
"Ultimately the Strategic Review highlighted multiple competing objectives and challenges: significant capital constraints at a time when subsidiary companies need capital for growth; $2.3 billion in group debt that is increasingly expensive to service and which is not being paid down as per the agreements of previous councils; the ever-present financial challenges facing council and its desire for higher dividends to offset rating pressure," Foote's resignation letter said.
"The CCHL recommendation to council was to allow CCHL to operate as an active portfolio manager to deliver against these competing objectives. Our recommendation would have lifted dividend flow to council by $450 million over the next 10-years and largely removed dividend volatility. It would have enabled debt to be paid down and for capital to be invested in the city's assets to ensure they were competitive, growing and resilient. Eighty-five per cent of the portfolio would have remained invested in infrastructure assets.
"It is important to stress that while politically convenient slogans around 'asset sales' came to mischaracterise the proposal, CCHL was committed to growing the value of the city's pool of assets."
The council rejected the proposal in December.
Templeton would not comment when contacted by RNZ, while MacDonald had not responded to attempts to make contact.
Mayor Phil Mauger did not address Foote's claims in a statement issued this morning.
"I would like to thank chair Abby Foote and the departing directors for their contribution to CCHL. I wish them all well in their future endeavours," his statement said.
"CCHL Deputy Chair Gill Cox will be the acting chair while the council moves to appoint a new chair.
"We look forward to continuing to work with the remaining members of the board and the new chair, who will move us forward in the direction set by the council."
Deputy mayor Pauline Cotter also did not wish to comment.
