The re-nationalisation of Air New Zealand (ANZ) will be completed this month (January) when the New Zealand government concludes its purchase of 1.25 billion ANZ ordinary shares.
This effectively ends a tortured process that began last June when ANZ asked the government to raise its foreign ownership caps to help a badly-needed recapitalisation. For reasons that are still disputed, that effort and a second funding plan failed, and the government chose to recapitalise the airline itself.
The government's capital contribution has come in two tranches. Wellington loaned ANZ NZ$300 million ($125 million) in October to pay debts and settle claims stemming from the decision to abandon its Ansett subsidiary. The government will convert that loan into preference shares at NZ$0.24 each on 1 January 2005.
Wellington is paying an additional NZ$585 million, or NZ$0.27 each, for its remaining shares. With this purchase the government's total stake will be 82%, while Singapore Airlines' 25% is diluted to 4.5% and Brierley Investments' 30.3% drops to 5.4%. Institutions own most of the remaining 8%.
On top of this NZ$885 million total recapitalisation, Wellington is offering a further NZ$150 million as a standby facility available anytime before July 2003. Finance minister Michael Cullen says the government is advancing the extra sum because of the "considerable uncertainties" ANZ still faces.
Wellington is already placing its mark on the airline. It has restructured the board, helped shape a new business plan, and picked ANZ's new chairman. Cullen assures, however, that government ownership will not influence the way it handles Virgin Blue's request to fly to New Zealand from Australia in competition with the flag carrier.
Agribusinessman John Palmer is replacing Auckland lawyer Jim Farmer as ANZ's chairman. He has considerable management experience, although none of it in aviation. He will help choose a new chief executive to replace Gary Toomey, who left in October.
Cullen, speaking for the government, says it will own ANZ "indefinitely". Eventually, however, Wellington plans to seek a cornerstone investor, probably another airline.
Source: Airline Business
