Forum Archive Index - December 2001

["Nick Kearney" <nickk@quicksilver.net.nz>]

Snoopy

Maybe I can answer these.  I'll have a crack anyway.

See below.

----- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Sunday, December 16, 2001 11:10 AM
Subject: [sharechat] AIR jigsaw - a piece missing?


> I have been catching up on the Air New Zealand reconstruction
> proposal.
>
> From page 34
> "A pro rata rights issue underwritten by the Crown would have
> arguably been a better option for minority shareholders in Air New
> Zealand, enabling all parties to the proposed recapitalisation to
> acquire shares at a substantially discounted price.  The crown has
> indicated that it intends to be a long term shareholder in Air New
> Zealand.  An underwritten cash issue would not have guaranteed this
> outcome."
>
> Something doesn't add up to me in this logic.  We know that Air New
> Zealand needs recapitalisation.  But why is the private sector money
> not as good as the governments?  Why is the government *insisting* on
> control?  And what percentage shareholding do they need for control?

SIMPLE, BECAUSE THEY ARE SOCIALISTS.  IT SEEMS THAT THEY LOOKED AT THE PAST
SHENANIGANS AND THOUGHT 'THIS WON'T HAPPEN AGAIN'.  TO ENSURE THAT, THEY
WANT TO CALL THE SHOTS.
>
> You could argue that Singapore Airlines had control of Air New
> Zealand with only 25% of the shares, for example.
>
> From page 30
> "the proposed recapitalisation requires 75% of the votes cast on
> certain resolutions at the meeting of Air New Zealand Shareholders to
> be in favour of these resolutions."
>
> I see the figure of 75% is mentioned above.
>
> The proposed recapitalisation will ensure that the government gets
> over 75% of the shares.  I know 50.1% means control, so what is the
> additional benefit offered if the controlling shareholder owns over
> 75%?  Anyone know?

IT ENSURES, I THINK, THAT TE GOVERNMENT CAN SELL WHEN IT WANTS TO WHOEVER IT
WANTS.  COMPANY LAW REQUIRES 75% VOTE FOR 'MAJOR TRANSACTIONS'.  WITH 50.1%,
THE GOVERNMENT COULD HAVE NOT ENTERED INTO A MAJOR TRANSACTION WITHOUTR
APPROVAL FROM OTHER SHAREHOLDERS.  WITH 75%+ THEY CAN DO IT AT WILL THROUGH
THEIR VOTES AT A SPECIAL MEETING
>
> From p40
> "The crown has already invested $300 million in Air New Zealand
> through the loan provided on 15 October 2001.  In Grant Samuel's
> opinion if the proposed recapitalisation does not proceed, the crown
> would be most unlikely to recover any of this loan, as it ranks
> behind a substantial amount of secured and unsecured debt."
>
> Is this part of it?   Are the board worried they will lose the $300m
> if they don't 'control' Air New Zealand?

I THINK THEY WOULD LOSE IT IRRESPECTIVE.  A SHAREHOLDER LOAN WOULD HAVE TO
RANK BEHIND OTHER SECURED CREDITORS WOULDN'T IT?  I CAN'T REALLY ANSWER THIS
APART FROM THAT.
>
> Or is there some secret agreement with the banks that unless the
> government 'controls' Air New Zealand they will pull the plug?

I THINK THIS IS QUITE APPARENT.  THE BANKS MADE IT QUITE CLEAR THAT THEY
WANTED EQUITY IN THE AIRLINE AND NOT MORE LOANS.  EVEN IF EQUITY CAME FROM
ANOTHER AIRLINE (EVEN A GOVERNMENT CONTROLLED ONE LIKE SINGAPORE) THE BANKS
STILL WOULDN'T BE AS COMFORTABLE AS THEY WOULD BE WITH EQUITY FROM OUR OWN
GOVERNMENT.  ALSO, CONSIDERING THE PROBLEMS AROUND THE WORLD WITH OTHER
AIRLINES, ANOTHER AIRLINE BUYING EQUITY WOULDN'T CUT THE MUSTARD WITH THE
BANKS.

HOPE THAT HELPS

NK

>
> SNOOPY
>
> P.S. Oh and one more thing.   To those 'A' shareholders who wish to
> have their view on the future composition of the board.   Sir Ron
> Carter and Ralph Norris were part of the board that approved the
> purchase of Ansett without due diligence.   I would strongly suggest
> that any 'A' shareholders turning up at the annual general meeting
> vote *against* these two men!
>
>
>
>
> -----------------------------------------------
> Message posted by Harry Tennyson
>  using Pegasus Mail 2.55
> I have Word 97 to read attachments
> ------------------------------------------------
>
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