Air New Zealand Rescue Package Finalised
The government will pay 27 cents a share for the second tranche of the $885 million Air New Zealand recapitalisation package, giving the Crown an 82 percent stake in the airline.
The first tranche – for $300 million – was paid over as a loan in October and will be converted, with accrued interest, into new convertible preference shares at 24 cents a share.
Finance Minister Michael Cullen said the transaction would take place in January subject to shareholder approval at the Air New Zealand Annual General Meeting to be held next month.
“The price negotiated between the Crown and the Air New Zealand Board takes into account the current state of the company, and its likely future prospects and risks. It is below where Air New Zealand shares are currently trading but the recent rise in the share price may reflect the market’s confidence that the Crown’s rescue package will restore the viability of the company.”
Dr Cullen also announced that the government had committed itself to provide up to $150 million in further funding before June 2003.
“We acknowledge that Air New Zealand faces considerable uncertainties in the near term and that a further capital injection may be required. Terms for the additional money will be negotiated as and when it is needed.”
Before the AGM, Air New Zealand would provide shareholders with details of the rescue deal, proposed changes to the company constitution, including a proposal to remove the distinction between the A and B shares, and a report commissioned by the Air New Zealand Board providing an independent view of the fairness and reasonableness of the pricing of the Crown’s equity placement.
“I am happy with the share price the Crown is to pay. It is fair to all parties and will give us a controlling stake and the right to appoint the board which is important if we are to be able to protect the taxpayers’ investment,” Dr Cullen said.
Financial authorisation for the cash injection will be provided through an imprest supply bill to be introduced into Parliament next week for passage this year.