Meridian Energy says chief executive Mark Binns was pivotal in the firm’s success with the two most challenging issues facing the business last year.
When the owners of the Tiwai Point aluminium smelter sought changes to their electricity agreement – the largest in the country – Mark took the role of lead negotiator.
While a team of negotiators spent months developing options and concessions the company could make, Mark’s role as lead negotiator meant he also spent days and weeks deep in the details of the proposed contracts.
Meridian says the grit he showed and his determination “not to fold” was key to the completion of a successful deal after almost a year of talks.
It was also important to have some certainty over the future of the smelter considering that Meridian’s initial public share offer was only months away.
Listing
Meridian says the proposed IPO was one of the main things that attracted Mark to the job. The offer, completed in October, was the largest in New Zealand’s history and the fourth-largest in Asia last year.
With sales in the US, UK and Australia, and an instalment receipt structure, it was also one of the more complex. Despite that, Mark’s tight management of the programme meant listing costs were held to 2 per cent of the sale proceeds, half the rate of other recent offers.
Keeping work largely in-house helped ensure deadlines were met and costs were contained. Staff also gained valuable experience.
A number of versions of the offer document were developed, with most of the meticulous due-diligence completed in-house. Mark personally led 90 investor presentations over four weeks.
The first instalment brought in $1.3 billion for the Crown and gave Meridian 62,000 New Zealand retail investors and institutional investors in six countries. The share offer also hit the Government’s target of 85 per cent New Zealand ownership.
Showing confidence in his staff, Mark chose to hand his other day-to-day responsibilities during the IPO over to Neal Barclay, Meridian’s general manager for markets and production, for several months.
Results
Mark is known for his frank, no-fuss approach. He deals honestly with staff and doesn’t shy from the tough business decisions that need to be made.
Soon after his arrival, this resulted in several long-term generation development projects being shelved. Mark’s focus on Meridian’s core business and its success in a competitive, low-growth environment also saw the firm’s Whisper Tech and Energy for Industry subsidiaries sold.
Based on a flat demand outlook, the company’s development team was downsized, with the loss of some long-serving staff.
A new general manager of retailing was appointed and there is an on-going structural review to ensure that all the arms of the retail business are delivering the best service and commercial results.
And the results are showing. For the year to June 2013, the first under Mark’s leadership, Meridian reported a 23 per cent increase in operating earnings. Underlying net profit, which excludes one-off costs and gains from asset sales, rose 53 per cent to $162.7 million.
In the retail business, an improved portfolio mix helped lift net contracted revenue by 3 per cent. Powershop, Meridian’s online retail business, increased sales by 7 per cent and also entered the Victorian market under Mark’s direction.
The Energy Executive of the Year category is sponsored by WorleyParsons