PAUL PHELAN / CAIRNS
Government plans to buy back control of New Zealand's flag carrier in a bid to save the airline from bankruptcy
The New Zealand Government is to renationalise Air New Zealand (ANZ), buying back around 83% of the carrier in a controversial rescue package injecting up to NZ$885 million ($362 million) to save it from bankruptcy. The airline was privatised in 1989.
The two-phase loan and equity investment plan was thrashed out between the government, the airline and its major shareholders - Brierley Investments (BIL), which has a 35% holding, and Singapore Airlines (SIA) with 25%.
Subject to shareholder and regulatory approval, an initial government loan of NZ$300 million will later be repaid and converted to shares at NZ$0.24 a share, with a second payment of NZ$585 million for ordinary shares to be made later "at a share price yet to be determined after due diligence, at a value fair to the taxpayer and ANZ shareholders". Finance Minister Michael Cullen said the NZ$300 million would be made available to the company as soon as possible.
The settlement does not affect an investigation by the Australian Securities and Investment Commission into the adequacy of ANZ and its collapsed Australian subsidiary Ansett's disclosure of financial information, which could make ANZ liable for other debts including around A$500 million ($250 million) in worker entitlements. The Australian Government has said it is considering paying A$300 million towards the entitlements if the cash is not raised elsewhere. It plans to recoup the money with a A$10 ticket tax.
The first phase of the recapitalisation is due to be finished by 19 October. The airline said unaudited shareholder funds on 31 August were NZ$506 million, but the closure of Ansett since then had incurred a further NZ$350 million in losses.
Shareholder funds are estimated at NZ$156 million, before taking into account the trading result for September, which will not be known for several days.
As part of the package, ANZ will also pay Ansett A$150 million in a deal that both airlines have agreed will represent a full settlement of business debt counter-claims between them. In addition, Ansett does not have to repay A$32 million in funds provided by ANZ to the administrators for wages, bringing the cash benefit to A$182 million.
ANZ and its directors will be released from further claims on the administrator relating to Ansett, and the balance of the loan will be used by ANZ as working capital.
No further capital has been sought from BIL or SIA, which will retain their shareholdings until at least 31 January, when the recapitalisation would have been completed.
At that stage their holdings will drop to 5.2% and 4.3% respectively. Both have agreed to support the transactions contained in the agreement.
ANZ has also agreed to enter into a commercial arrangement with the Ansett Group as a preferred partner, and to provide intellectual property to assist the administrators to carry on the Ansett business "as long as it is not detrimental to Air NZ".
The agreement with the voluntary administrator is subject to the approval of the Federal Court of Australia and the Ansett committee of creditors, expected by 12 October. Under a reconstituted board, ANZ is set to announce significant shrinkage of its international and domestic schedules, to reflect the reduction in trans-Tasman feed as a result of the closure of Ansett and the consequences of the attacks in the USA.
Ansett has resumed flying with a limited service. Airline administrator Mark Corda says ANZ will remain a partner with Ansett on interlining and shared systems, and he has asked ANZ and SIA for discussions on the management and operation of Ansett. The move is being seen by some observers as a way of shaping the revived Ansett for handing over to SIA.
Corda says Ansett will only use its 11 Airbus A320s initially but will soon decide on whether to put five Boeing 767s back into service or to sell them. The main airline still owns around 29 aircraft, while another 36 are financed, and 17 more are on operating leases.
Corda adds that the airline's BAe146s and some of its Fokker 50s are "surplus to requirements", but the fleets of its regional airlines Aeropelican, Hazelton and Kendell will be part of the sale of those airlines as going concerns.
Source: Flight International
