Update: Canadian bid for airport now in hands of OIO and ministers

By NZPA

Friday 14th March 2008

The future ownership of Auckland International Airport (AIA) is now down to the Overseas Investment Office (OIO) and two cabinet ministers.

AIA announced today that the Canada Pension Plan Investment Board (CPP) had received the backing it needed for its 40% partial bid for the airport.

Shareholders holding 80% of the company had voted on the bid, with 57.7% approving the offer.

A majority of shareholders voting needed to back the offer for it to go ahead.

Last night CPP said it had gained acceptances for 63% of shares in AIA, easily achieving its target of 39.2%. After a slow start, the bid at $3.60 per share crossed the line during trading yesterday. AIA shares closed up 35c at $2.54 yesterday but fell back 19 cents to $2.35 today on the view the shares no longer contain a control premium.

Shareholders who accepted the bid will end up with around a third of their shares as acceptances are scaled back.

Analysts believe the CPP decision to limit its vote in AIA to 24.9% means the OIO should recommend the bid to the ministers.

But political analysts believe the ministers -- Land Information Minister David Parker and associate finance minister Clayton Cosgrove -- could well reject CPP on naked political grounds because foreign ownership is unpopular and the Government trails heavily in opinion polls.

CPP vice-president -- head of infrastructure -- Graeme Bevans, said the OIO recommendation would be crucial.

"There is an administrative process set out in the OIO Act and regulations that must be followed."

CPP has a legally opinion from prominent law firm Bell Gully that the bid "has a high probability of success".

The CPP will argue that 27,000 shareholders accepted the offer and they represent the view of middle New Zealand, with a predominance of Aucklanders. If the Government wants to win the election, it needs to have these kind of voters on side -- essentially elections are won on the middle ground.

CPP won't say who it has employed for political advice.

Yesterday, CPP lodged an application with the IRD for a binding tax ruling.

As well as tightening the regulations on foreign control, the Government changed the rules regarding the tax deductability of stapled securities, which is part of the CPP amalgamation plan.

Asked if the Government had been fair in changing the rules, Bevan said it had been transparent and CPP had responded.

AIA chairman Tony Frankham today said the OIO had until April 11 to make a recommendation.

"Auckland Airport hopes that, in the interests of certainty and an informed market, the government ministers concerned will announce their decision well before this deadline," he said.

A spokeswoman for Cosgrove today said the OIO would provide a detailed report to the ministers.

They did not know when that would be received and there was no statutory timeframe for their decision.

However, they would try to make it as soon as reasonably possible.

If approval was not gained by April 11, the offer would lapse and the shares offered for sale would no longer be subject to the bid which meant they would be free to be traded as usual.

John Banks, mayor of Auckland City, which chose not to sell its 12.75% stake into the bid, said he expected the Government to intervene to stop the Canadians.

CPP said it would provide final details on scaling of the acceptances once acceptance levels were finalised by the middle of next week.

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