The Government is injecting capital into the airline. They are not buying anyone out. The result is of course dilution of existing shareholders, such that SIA will hold just over 4%, and Brierlies just over 5%.
Here's a good article from nzoom.com (Television New Zealand):
Toomey survives in Air NZ mop up
Air New Zealand's financial rescue involves the government putting in $885 million in total - and Chief Executive Gary Toomey keeping his job.
The deal is subject to shareholder approval at the airline's annual meeting, now delayed until December. But the way it is structured means the airline gets an immediate $300 million from the government as a commercial loan attracting interest of 9.3% at current rates.
That $300 million is to be converted to into preference shares before the annual meeting, but Air NZ Acting Chairman Jim Farmer says those shares will not be voting shares at the meeting and the whole deal with regard to the share issue remains subject to shareholder approval.
However, he added that once the $300 million is advanced ( as a loan) it is non-retractable. Straight away $182.6 million of it is to be funnelled off to Ansett's administrators as part of a settlement agreement.
The remaining $117.3 million will be used by Air NZ as working capital. Meanwhile the government has agreed to indemnify the airline for "certain liabilities" until it gets the money.
The second tranche of $585 million will give the government new equity (shares) in the airline.
Calculations show the government if its puts in the full $885 million at 24c per share, would end up owning 83% of the airline.
Subsequent dilution means Singapore Airlines ends up with 4.3% and Brierley Investments with 5.2%. Neither are injecting new capital under the rescue plan and have agreed to hang on until January 31, 2002.
The price for shares covering the first $300 million of taxpayer funding has been set at 24 cents a share. The price for shares covering the $585 million is to be negotiated by the airline board and the government after due diligience and independent appraisals.
Finance Minister Michael Cullen said later that in the event the share price for the second tranche is lower than 24 cents, the lower price will become the price paid for the convertible preference shares.
The trading suspension for Air NZ shares is expected to be lifted for Thursday afternoon's session, "after the market has had time to digest the information". The As and Bs last traded at around 40c before the suspension was placed at the airline's request on Friday.
Under the recapitilisation plan the airline will have only one class of ordinary shares.
Air NZ says it has reached an agreement with Ansett's voluntary administrator to pay $A150 million in settlement of claims against it.
It return it will relinquish claims of $A160 million against Ansett's assets.
In addition two senior Air NZ managers in association with Singapore Airlines are working with the Arthur Andersen administrators to help restructure Ansett for a commercially viable future.
The airline's Acting Chairman Jim Farmer said Chief Executive Gary Toomey is keeping his job. Toomey was not present at the media conference called to make the announcement.
Farmer said Toomey was busy getting on with the job of running the airline. His team is working on a plan for the restructuring and reconstitution of the company.
Farmer refused to talk about operational changes and possible redundancies. His media minder, David Beatson, said that was not Farmer's role, nor the right time. Any restructruing plan needed the sign off from the airline's board.
Sir Selwyn Cushing resigns
Air NZ's board will be slimmed down from 13 to 8. Former Chairman Sir Selwyn Cushing, who's actions Farmer described as "impeccable", resigned from the board overnight on Wednesday.
Farmer said he is staying on in an acting role and fellow director Ralph Norris, Sir Ron Carter and Liz Coutts are also staying as independent directors.
Others on the board will include Wellington QC Bill Wilson, who is chairman of BIL Assets NZ and Singapore Airline's Chief Executive Dr Cheong.
Two further members are to be appointed by the board. Farmer said one of those is retired PricewaterhouseCooper's director Roger France, who has played an active role in the rescue package negotiations.
Farmer said the second will be known in about a week. And he conceded that while legally both will be board appointments, they will be there to represent the Crown.
Farmer said the recapitilisation agreement will allow Air NZ to start a process of recovery from the severe setbacks it has suffered on several fronts.
Rebuilding the airline's reputation in Australia, its key market, is vital Farmer said.
Published on Oct 04, 2001
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