13 September 2001 Media Statement

Cullen signs Heads of Agreement with Air New Zealand

Finance Minister Michael Cullen today signed off a conditional agreement to assist Air New Zealand retain its role as a viable New Zealand airline.

Under the terms of the agreement the Government has agreed to assist Air New Zealand with a loan facility of an amount up to $550 million.

Dr Cullen noted that this facility is being provided by the Government on strictly commercial terms and is conditional on agreement being reached between the government, the airlines and its shareholders on a way forward for Air New Zealand. It is also conditional on Singapore Airlines and BIL injecting more capital by an equity subscription of $150 million each.

In addition a national interest package is to be a part of the final package to ensure maximum ongoing benefit for New Zealand. The arrangement allows Singapore Airlines to own up to 35% of Air New Zealand and insures that the Chairperson will be appointed with the agreement of the Government and the majority of the Board would remain New Zealand citizens.

The Heads of Agreement comes after over two months of negotiations between the Crown negotiator and Air New Zealand and has the approval of the Cabinet Subcommittee comprising Helen Clark, Jim Anderton, Michael Cullen, Mark Gosche, Trevor Mallard, Mark Burton, and Paul Swain.

Dr Cullen said that the agreement is subject to due diligence by the three parties – which will take place over the next four to six weeks – and the agreement of the company's bankers.

Part of the package the parties have agreed to includes some provisions on governance arrangements. There will now be a board of nine people. SIA and BIL will appoint three directors each. The Kiwi Shareholder will be consulted and has to agree with major shareholders on the appointment of the Chair. The Kiwi Shareholder will be consulted on one each of the directors appointed by BIL and SIA.

ENDS

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