Forum Archive Index - September 2001

["Jeremy" <jeremy@electrosilk.net>]

> If media reports are correct, on Monday, New Zealand's prime minister
Helen
> Clark raised the possibility of statutory management for Air New Zealand.
> The shares fell 40% as investors stampeded for the exit, fearing the
worst.
>
> Then yesterday Helen Clark recommended investors "hang on" to their
shares,
> as she is "absolutely convinced that Air New Zealand has a viable future".
>
> The shares rose by 50% as investors stampeded in.

Well, I'd say speculators rather than investors, but we'll let that pass.

I suspect the prime minister made the first statement as a statement of fact
that should have been cash neutral for shareholders.  It was poorly
interpreted by a lot of people (what a surprise!) and she was forced to
issue a counter-balancing statement the following day.

It is very difficult to know when to speak and when to shut up in these
affairs.  If she says nothing she would be in trouble for being weak.  If
she says something she will be in trouble for inflaming the market.

I'd say that the best thing she could have done arrange an immediate halt on
share trading in AIR and appoint a third party manager for a few months.

The facts are that AIR has had all the major damage it's going to get from
financial incompetence.  The coup de grace would be applied by letting its
shares trade.

A halt on trading and appointing an administrator is about the only thing
that can be done to maintain shareholder value.  Shareholder value being not
what people paid over the past few days, but the realisable value of the
assets and/or the income from continued trading.

Jeremy



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