Speculation that the government was going to sell down some of its shareholding in Air New Zealand soon was confirmed yesterday.
The Government has today started the process to sell 20 per cent of Air New Zealand shares, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.
“A sale of shares to New Zealand brokers and to New Zealand and some offshore institutions will commence tomorrow, Monday 18 November, via a bookbuild process,” Mr English says. “We expect the transaction to be completed by Tuesday evening.
“New Zealanders will be at the front of the queue for shares and we are confident we will achieve the Government’s objective of at least 85 per cent New Zealand ownership.
“Air New Zealand is different from the other companies in the Government share offers programme in that it is already listed on the New Zealand and Australian sharemarkets. This means a different process will be used to reduce the Government’s shareholding.
“The Treasury sought proposals from its panel of financial advisers to carry out an off-market sell down via a bookbuild. Craigs Investment Partners, together with Deutsche Bank and Goldman Sachs, have been appointed to undertake the transaction and work with New Zealand sharebrokers in particular to target widespread New Zealand ownership.
“Shares will be sold via a competitive bookbuild process to New Zealand sharebrokers for on-sale to New Zealanders, and to New Zealand and some overseas institutional investors.
“Shareholding sell downs of this type are typically conducted off-market when the company’s shares are not trading on a stock exchange, to ensure the company’s share price is not affected by speculative trading,” Mr English says.
“An off-market sell down is fast and efficient, which is important when working with a company that is already listed.
“Usually these types of sales are completed in less than one day. However, to target widespread New Zealand ownership, we are conducting the bookbuild over Monday and Tuesday to give New Zealand sharebrokers time to discuss the offer with retail investors.
“That is why the sell down process is being started today and we anticipate there will be a trading halt of Air New Zealand shares on the NZX and ASX when the markets open tomorrow.
“We expect Air New Zealand’s shares to resume trading on the NZX and ASX on Wednesday,” Mr English says.
Mr Ryall says Air New Zealand is currently trading at five-year highs, making it an opportune time to conduct the sell down.
“Air New Zealand is one of our most iconic global brands and has regularly been recognised on the world stage as a leading international airline. Its share price has been performing strongly.
“New Zealanders interested in purchasing Air New Zealand shares should talk to a sharebroker or authorised financial adviser.
“The Crown currently owns 73 per cent of Air New Zealand. Therefore, the sale of 20 per cent of Air New Zealand shares will leave the Government with a shareholding of around 53 per cent of the airline.
“There have been several successful similar off-market sell downs in recent times, involving other existing NZX listed companies such as Auckland Airport, Trade Me, Summerset and Sky TV.
“This sale approach will keep down transaction costs for taxpayers, maximising the proceeds that we can invest in other public assets like hospitals and schools.
“The Government’s share offer programme has raised $3.6 billion from the first two share offers.
“The proceeds of the programme have been allocated to the Future Investment Fund so the money can be reinvested in new assets and new infrastructure without the need to borrow money from overseas lenders,” Mr Ryall says.
Air New Zealand was listed with other SOEs National said it would partially float if it won the last election.
The sale of a few shares is simple because the company is already listed on the share market.
Ministers have been asked about the possible sale recently. They couldn’t confirm it before the announcement without breaching stock exchange rules.
The decision is already being criticised because the sell-down will take place before the upcoming referendum on the partial sale of a few state assets.
That criticism is just political posturing.
National was explicit about its intention to partially float some SOEs and the Opposition said the election would be a referendum on the issue.
They lost and the referendum is nothing but an expensive publicity exercise for them.
There’s no need to wait for the results. They’re non-binding and the government has made it quite clear it will ignore them, as it has the right to do.