Air New Zealand trade expected within the week


The countdown to the Government’s sale of 23 per cent of Air New Zealand is said to be under way.

The Australian Financial Review reported that moves to sell the stake – worth about $400 million – are expected to start within the week.

There is a sense a deal could be completed before a citizens referendum on the mixed ownership of government-owned companies. Voting will begin on Friday next week on the non-binding referendum over the sell-down of up to 49 per cent of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand.

”There has been speculation for a few weeks but no final decision has been made,” a spokesman for Finance Minister Bill English said this morning.

If and when a sell down happens, it would be done via brokers (who may then sell the shares on to retail investors).

This is because Air New Zealand is already listed so the Government stake can’t be sold via an Initial Public Offering in the same way Mighty River Power and Meridian Energy were.

Air New Zealand would not comment except to say it was “entirely a matter for the Government as shareholder”.

Milford Asset analyst Brian Gaynor told Radio NZ that because the Government gets monthly accounts from Air New Zealand it is considered an insider, giving it short windows of opportunity to sell due to market and trading regulations.

The window was currently open but it if it did not sell by the end of November it would be difficult to sell the shares in the next 3-4 months, Gaynor said.

Because the market was primed for the sale he expected it could be completed with a couple of hours.

The AFR said investment banks with the biggest distribution platforms in New Zealand were viewed as most likely to get the Air NZ role.

Deutsche Bank, which has handled Air NZ’s purchases of 22.9 per cent of Virgin Australia, was affiliated with Craigs and handled News Ltd’s Sky TV sell-down this year.

Other contenders include the combinations of Credit Suisse/First NZ Capital and Merrill Lynch/Forsyth Barr. But Macquarie Capital, UBS and Goldman Sachs all have strong franchises in NZ and have done other deals there, so they can’t be ruled out either.

At present, 5.5 per cent of Air NZ – or a quarter of the free float – is owned by Australian investors.

Air NZ is the most profitable of the three major listed Australasian airlines and unlike Qantas Airways and Virgin, it has been paying dividends to its shareholders.

Air NZ shares have risen by 48 per cent since the start of the year. They closed yesterday on the NZX at $1.67 each.


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