MEDIA RELEASE
5 November 2002

AIAL to assist with Auckland City share sale

“Auckland International Airport Limited’s (AIAL’s) directors and management have agreed to assist Auckland City with the sale of its 25.6 per cent stake in the airport,” says the chairperson of the council’s working group, Councillor Douglas Armstrong.

The council is intending to sell the airport shares to repay debt and provide the funds necessary to improve the city’s infrastructure.

“Having the company’s assistance with the sale will help ensure that potential purchasers are well informed,” says Councillor Armstrong.

The council is using a dual-track sales process. The sales strategy will target trade buyers and institutional investors to achieve the best price and maximise any sale proceeds. The shares will only be sold if a good price can be obtained, according to Councillor Armstrong.

“Potential trade buyers will wish to visit the airport and meet management,” says Auckland City Director of Finance David Rankin. “AIAL directors and management will also be assisting Auckland City with preparing institutional offering documents.”

Mr Rankin says that Auckland City needs to compensate AIAL for the time its directors and management spend helping the city, and meet the costs of AIAL’s legal advice.

“We are confident the benefits from AIAL assistance in terms of the price we get for the shares will far outweigh these costs,” Mr Rankin says. “It is reasonable for AIAL to require compensation for providing assistance which provides direct benefits only to one of its shareholders, albeit a major one.”

Auckland City will also indemnify the company, directors and management for any liabilities arising for them under the sales process. An indemnity will also be put in place for Auckland City councillors and officers.

A liability could arise if a share buyer considers they have been misled by AIAL or Auckland City during the sales process and have suffered a loss as a result. However, the due diligence process that Auckland City and AIAL have entered into to prepare the offer documentation minimises this risk, Mr Rankin says.

“Auckland City’s decision to indemnify AIAL, councillors and officers is normal business practice. The New Zealand Government also put in place indemnities for AIAL when it sold its shares in the company in 1998. The indemnities are very much a precautionary measure and I have every confidence the protocols we have already established for the sales process will mean there won’t be any claims.”

ENDS

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