Straits Times Singapore (English)0
NZ government may take '80% stake' in Air NZ
It plans to inject up to $725m under new bail-out plan but is not keen to holdits stake for the long term, report says
By Rebecca Lee
THE New Zealand government may take a majority stake in Air New Zealand (Air NZ) worth up to NZ$1 billion (S$725 million) to prevent it from collapsing, but has ruled out a long-term shareholding.
Yesterday, Radio New Zealand reported without citing sources that the government may take an 80 per cent stake by injecting up to NZ$1 billion as a rescue plan announced last month falters.
This stake would be sold to the public through a share flotation eventually, it added.
An announcement of the revised bail-out plan could come as early as this morning, Reuters reported.
Air NZ was struggling before the Sept 11 terrorist attacks in the United States sent the global airline industry into crisis and the government is under intense pressure to ensure the carrier does not end up like the kiwi - a flightless bird.
Radio NZ did not give details other than saying the new rescue plan will include a payment to the administrator of failed Air NZ unit Ansett Holdings for part of the A$400 million (S$355 million) of benefits claimed by its 15,000 employees.
Finance Minister Michael Cullen, replying to questions in parliament yesterday, also hinted that the government will take an equity stake in the national carrier.
At the time of the earlier plan unveiled on Sept 13, Air NZ shareholders Singapore Airlines (SIA) and Brierley Investments did not want their stakes diluted and preferred a government loan to a government shareholding, he said.
But 'that changed when it became apparent to the board that more equity was needed more quickly than the Sept 13 agreement envisaged', he said in transcripts obtained by The Straits Times.
He added that 'the government does not see itself as the long-term shareholder in the company'.
Air NZ said on Tuesday that a final proposal was to be announced 'within the next 48 hours'.
'We are close to finalising agreements...It will be very clear that SIA and Brierley are not beneficiaries of the changed relationships,' Dr Cullen also said yesterday.
The government has already offered to lend the debt-laden carrier up to NZ$550 million under the Sept 13 recapitalisation plan, where SIA and Brierley would each inject NZ$150 million for fresh equity.
But analysts and Brierley chief executive officer Greg Terry said the NZ$850 million plan was no longer sufficient, given the dismal state of the global aviation industry following the Sept 11 attacks.
Yesterday, SIA shares closed 25 cents, or 3 per cent, higher at $8.55 on prospects of a Kiwi government bail-out for Air NZ. But dealers said the price gain may be short-lived as it could be a technical rebound after a recent selldown.
When contacted, neither SIA nor Brierley would comment on the latest reported government bail-out plan.
But sources said SIA still maintained its stance of not putting in more than the NZ$150 million agreed under the earlier plan.
Brierley's Mr Terry last week also made it clear that his company, which was pulled into the red as a result of a US$168 million (S$298.7 million) write-down over Air NZ, will inject more capital only if it enhances the value for its own shareholders.