Hon Bill English
Minister of Finance
Hon Tony Ryall
Minister for State Owned Enterprises

17 November 2013
Media Statement
Air New Zealand sell down process underway

The Government has today started the process to sell 20 per cent of Air New Zealand shares, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

“A sale of shares to New Zealand brokers and to New Zealand and some offshore institutions will commence tomorrow, Monday 18 November, via a bookbuild process,” Mr English says. “We expect the transaction to be completed by Tuesday evening.

“New Zealanders will be at the front of the queue for shares and we are confident we will achieve the Government’s objective of at least 85 per cent New Zealand ownership.

“Air New Zealand is different from the other companies in the Government share offers programme in that it is already listed on the New Zealand and Australian sharemarkets. This means a different process will be used to reduce the Government’s shareholding.

“The Treasury sought proposals from its panel of financial advisers to carry out an off-market sell down via a bookbuild. Craigs Investment Partners, together with Deutsche Bank and Goldman Sachs, have been appointed to undertake the transaction and work with New Zealand sharebrokers in particular to target widespread New Zealand ownership.

“Shares will be sold via a competitive bookbuild process to New Zealand sharebrokers for on-sale to New Zealanders, and to New Zealand and some overseas institutional investors.

“Shareholding sell downs of this type are typically conducted off-market when the company’s shares are not trading on a stock exchange, to ensure the company’s share price is not affected by speculative trading,” Mr English says.

“An off-market sell down is fast and efficient, which is important when working with a company that is already listed.

“Usually these types of sales are completed in less than one day. However, to target widespread New Zealand ownership, we are conducting the bookbuild over Monday and Tuesday to give New Zealand sharebrokers time to discuss the offer with retail investors.

“That is why the sell down process is being started today and we anticipate there will be a trading halt of Air New Zealand shares on the NZX and ASX when the markets open tomorrow.

“We expect Air New Zealand’s shares to resume trading on the NZX and ASX on Wednesday,” Mr English says.

Mr Ryall says Air New Zealand is currently trading at five-year highs, making it an opportune time to conduct the sell down.

“Air New Zealand is one of our most iconic global brands and has regularly been recognised on the world stage as a leading international airline. Its share price has been performing strongly.

“New Zealanders interested in purchasing Air New Zealand shares should talk to a sharebroker or authorised financial adviser.

“The Crown currently owns 73 per cent of Air New Zealand. Therefore, the sale of 20 per cent of Air New Zealand shares will leave the Government with a shareholding of around 53 per cent of the airline.

“There have been several successful similar off-market sell downs in recent times, involving other existing NZX listed companies such as Auckland Airport, Trade Me, Summerset and Sky TV.

“This sale approach will keep down transaction costs for taxpayers, maximising the proceeds that we can invest in other public assets like hospitals and schools.

“The Government’s share offer programme has raised $3.6 billion from the first two share offers.

“The proceeds of the programme have been allocated to the Future Investment Fund so the money can be reinvested in new assets and new infrastructure without the need to borrow money from overseas lenders,” Mr Ryall says.

AIR NEW ZEALAND – QUESTIONS AND ANSWERS
Why is the Air New Zealand sell down occurring now?
The Crown is progressing through its share offer programme and has previously committed to sell down its shareholding in Air New Zealand when market conditions were right. Air New Zealand’s share price has recently been trading at five year highs and the NZX is up by around 25 per cent over the past 12 months, so it is an opportune time to sell down the Crown’s shareholding to maximise proceeds for the benefit of New Zealand taxpayers.
What is an off-market sell down?
It is a sale of a significant quantity of shares conducted when the company’s shares are not trading on the sharemarket. Off-market sell downs are used to reduce potential share price volatility, which can impact negatively on a company’s trading price in the lead up to a sale of a significant number of shares.
What other recent transactions have used similar off-market sell down processes?
There have been a number of recent sales of significant shareholdings in NZX-listed companies that have used similar off-market sell down processes. These include Sky TV, Summerset, Auckland Airport, TradeMe, and Steel and Tube.
Why is the Crown undertaking the sell down using a bookbuild process?
A sell down to retail brokers and institutions is fast and efficient, which is important when working with a company that is already listed and trading on the NZX and ASX. Using this process, the Crown will be able to achieve widespread New Zealand ownership while minimising disruption to the company, and keeping down transaction costs.
Who can participate in the bookbuild process to bid for shares?
New Zealand retail broking firms, New Zealand institutions and some overseas institutions will be invited to participate. New Zealanders will be at the front of the queue for shares and we are confident of achieving 85 per cent New Zealand ownership.
How will New Zealanders be at the front of the queue for shares?
The Crown will allocate shares through a bookbuild process, similar to Mighty River Power and Meridian, giving it discretion over who gets shares. New Zealand sharebrokers will be invited to participate in the bookbuild and a condition of participation will be that shares can be allocated only to clients who meet the New Zealand client test (IRD number, New Zealand bank account, New Zealand address), as was the case with the previous share offers.
How can New Zealanders buy Air New Zealand shares?
New Zealanders interested in buying Air New Zealand shares should talk to a sharebroker or authorised financial adviser. Anyone can buy Air New Zealand shares on market when the company resumes trading.
How many shares does the Crown own?
The Crown currently owns 804,191,058 Air New Zealand shares or about 73 per cent of the company. Twenty per cent of the company is around 220 million shares.
How many shares will be sold?
No decision has been made on the final number of shares to be sold, as this will be subject to the outcome of the bookbuild process. However, we are expecting to sell 20 per cent of the company, which would leave the Government with around 53 per cent of the airline.
At what price will the shares be sold?
The price will be decided by the Crown based on the bidding price offered by investors through the bookbuild process. New Zealand retail broking firms, New Zealand institutions and some overseas institutions will be invited to participate in the bookbuild bidding process.
IMPORTANT NOTICE
Not for release or publication in the United States. Nothing in this announcement constitutes an offer, solicitation, invitation or specific recommendation of securities for sale in any jurisdiction where, or to any person to whom, such offer or sale is not permitted. In particular, this announcement does not constitute an offer of securities for sale in the United States and must not be distributed to any person in the United States. Any securities described in this announcement have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “US Securities Act”), or under the securities laws of any state or other jurisdiction of the United States, and may not be offered, sold or otherwise transferred, except in compliance with the registration requirements of the US Securities Act, and any other applicable securities laws or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and any other applicable securities laws. The shares in the offer referred to herein are not being sold in the United States and have not been and will not be registered under the securities laws of any jurisdiction.

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