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.
Ends