$5.6 billion proposal for Auckland Airport

23 July 2007

$5.6 billion proposal for Auckland Airport

The directors of Auckland International Airport Limited (AIAL) today announced a proposed transaction with Dubai Aerospace Enterprise (DAE) which would see DAE acquire an interest between 51% and 60% in the AIAL business and become a strategic partner. Under the proposal, AIAL shareholders will receive value of up to NZ$3.80 per share. The directors of AIAL have unanimously recommended the proposed transaction. This decision was reached in the absence of a superior proposal.

Chairman of the board of AIAL, John Maasland, said the proposal involves an amalgamation and the establishment of a new company, Auckland Airport Limited, in which DAE would invest up to NZ$2.6 billion and hold between 51% and 60% of the shares.

DAE is a global aerospace manufacturing and services corporation that is seeking to become a major player in the international aerospace industry.

Shareholders will be asked to vote on the proposal at a meeting in November 2007. Under the Merger Implementation Agreement, a copy of which is attached, the AIAL board is not restricted from considering competing proposals from other parties and making a recommendation to shareholders if the board believes another proposal would provide a better outcome for shareholders. In these circumstances, the board has the ability to terminate the Merger Implementation Agreement after consultation with DAE.

If the proposal is approved by shareholders and completed, AIAL and DAE will enter into a Cooperation Agreement. Under this agreement, DAE confirms its commitment to enhance AIAL’s existing business, and working with AIAL to pursue new opportunities beyond the existing airport site.

“We believe DAE will bring additional aviation and tourism development experience to the New Zealand business. This partnership should deliver significant benefits to the company and New Zealand tourism as a whole,” said Mr Maasland.

The DAE offer gives AIAL shareholders a range of options to achieve an equivalent value of up to NZ$3.80 per share. This value represents a premium to shareholders of 55.9% to the average trading price over a one month period prior to 5 May 2007, when takeover speculation around the company arose. This represents an Enterprise value for AIAL of $5.6bn.

The base proposal is for shareholders to receive NZ$2.34 cash per share, a new stapled security1 (share plus loan note) in Auckland Airport Limited plus a final fully imputed dividend from AIAL of NZ$0.07 per share.

Shareholders can elect a preference to take “more stapled securities and less cash”, or “more cash”. The final allocation of cash or stapled securities for those shareholders electing out of the base proposal will be on a pro rata basis and will be dependant on the composition of all shareholder elections.

DAE is providing an additional pool of up to NZ$312.75 million for those AIAL shareholders who express a preference to receive more cash and whose preference is not initially met.

From this additional cash pool DAE will acquire stapled securities at NZ$1.39 per security. This increases the ability of those shareholders who elect the “more cash” offer to be satisfied and could see DAE’s shareholding increase to a cap of 60%.

Auckland Airport Limited will be listed on the New Zealand and Australian stock exchanges as AIAL is currently. The board will comprise seven directors, three appointed by DAE and four, including an independent chairman, from the existing board.

Bob Johnson, DAE’s chief executive officer said today that DAE regarded the proposed transaction as a significant development with exciting potential for both parties.

“Auckland Airport Limited will be a cornerstone investment for DAE and as such, will receive our considerable support to continue to successfully develop the business on the global stage,” he said.

1 Stapled securities comprise a convertible loan note stapled to an ordinary share. Although each security is legally separate, they are traded together at a single market price.

Mr Maasland said there had been a significant increase in interest in AIAL from a wide range of parties including infrastructure and pension funds in recent months.

“This level of interest is not surprising, given that Auckland International Airport is the only standalone listed asset of its kind in Australasia and is widely recognised as a well managed and highly efficient operation.

The board considered that any proposal needed to not only achieve a premium for shareholders, but to also introduce an industry partner who would further enhance our plans for growth and development”.

Mr Maasland said the board was also keen to see shareholders have the opportunity to continue to participate in the success of the company. Under this proposal with DAE they are able to do so via the establishment of the new airport company.

“We look forward to discussing further detail about the merits of this proposal with shareholders and other stakeholders in the weeks ahead,” he said.

To conclude a transaction both AIAL and DAE require confirmation of at least a BBB- / Stable credit rating from Standard and Poor’s and confirmation from the independent expert that the transaction is fair and reasonable. AIAL has appointed Grant Samuel & Associates Limited to prepare an independent report on the proposed transaction. A copy of the independent report, the amalgamation proposal, a prospectus and investment statement relating to the stapled securities will be issued to shareholders in October 2007.

The transaction is subject to 75% AIAL shareholder approval and also requires Overseas Investment Office approval.

ENDS

About DAE:

DAE is a fast developing global aerospace, manufacturing and services corporation made up of six divisions – DAE Airports, DAE Capital, DAE Engineering, DAE Manufacturing, DAE Services and DAE University.

Headquartered in Dubai, the group is growing through a series of phased developments and acquisitions to become a global player and to produce an integrated aerospace cluster, based at Dubai World Central – the new 140 square kilometre airport and logistics city being constructed in Jebel Ali, Dubai. It is forming international partnerships at the highest level of industry with the aim of establishing one of the most innovative and successful businesses in the global aerospace industry within the next decade.

DAE’s shareholders include EMAAR, ISTITHMAR, Dubai Airport Free Zone Authority (DAFZA), Dubai International Capital, DIFC Investments LLC, the Government of Dubai and AMLAK Finance.

Advisors:

First NZ Capital and Credit Suisse have acted as financial advisors and Russell McVeagh have acted as legal advisor to AIAL with respect to this transaction.

Deutsche Bank has acted as financial adviser and Mayne Wetherell has acted as legal adviser to DAE with respect to this transaction.

Attachments:

 Merger Implementation Agreement between Auckland International Airport Limited and Dubai Aerospace Enterprise (DAE) Limited.

 Co-operation Agreement between Dubai Aerospace Enterprise (DAE) Limited and Auckland Airport Limited (to be signed on completion).

See... Shareholder Proposal Documentation 230707

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