Forum Archive Index - March 2000

["simon dallimore" <smndallimore@hotmail.com>]

Hey Ben,
The article you have on the front page of Sharechat this morning is from the 
Sydney Morning Herald and is perhaps not as up to date as the article in 
this morning's NZ Herald. Perhaps, to give a balanced perspective of the Air 
NZ situation for investors, it might pay to run the NZ Herald story too as 
the writer,Geoff Senescall has been very close to the action. Thanks.
[For the benefit of readers, the article in the NZ Herald is reproduced 
below and my understanding from reading it is that the Singapore 
Airlines/Air NZ deal is not in disarray at all and looks very much on the 
cards pending Brierley buying up some more unrestricted shares to make up 
the quota required by Singapore Airlines.]
Simon.

Brierley clears path for Singapore offer

16.03.2000 - By GEOFF SENESCALL

Brierley Investments was positioning itself yesterday to increase its 
shareholding in Air New Zealand so it could deliver a 25 per cent holding to 
Singapore Airlines.
Under the deal, which was hanging in the balance last night, Brierley needs 
to buy a further 46 million of the unrestricted shares in Air New Zealand to 
meet its side of the bargain.
At present it holds around 96 million B shares, which equates to 17 per cent 
of the total shares on issue in the local carrier. In a telling move, 
Brierley extended to October 1 the formal notice to Air New Zealand 
shareholders, needed to raise its stake in the airline to
60 per cent from 47 per cent.
Brierley first issued the notice in June 1999 when it initially tried to woo 
Singapore Airlines into buying shares in the local carrier without success.
In the latest notice Brierley has also amended the price it intends paying 
for each share to a range between 250c and 300c. Previously the company had 
said it would pay between 240c and 340c for A shares and
between 330c and 430c for B shares.
The lower price reflects the recent weakness in the Air New Zealand share 
price as the company looks to digest its $A580 million purchase of the 
remaining 50 per cent of Ansett Australia it agreed to buy last month.
It also straddles the 280c price Brierley is understood to have agreed to 
sell shares to Singapore.
On speculation of a deal with Singapore, the Air New Zealand B shares closed 
at 249c after trading as high as 262c yesterday. The A shares closed at 
202c.
To buy the extra shares Brierley needs it can either stand in the market or 
try to target local institutions owning B shares and attempt to swap them 
for Brierley A shares, which can be owned only by New Zealanders.
There was speculation that Brierley might have already sounded out 
institutions about the share swap option. But this could not be confirmed 
last night by the Business Herald.
Brokers were sceptical about Brierley's ability to source Air New Zealand B 
shares through a stand in the market without pushing the price through the 
roof. According to Jason Smith - an Australian-based aviation analyst for 
Salomon Smith Barney - the proposed deal made sense for both Air New Zealand 
and Ansett Australia as well as Singapore.
"It makes logical sense, it raises the barriers to entry for new airlines 
into the Australia marketplace and it does form what should be a stronger 
competitor, on a three-year view, to Qantas," he said.
"But I would still want to emphasise there is still a lot of work that needs 
to be done in the integration of Air New Zealand and Ansett, regardless of 
Singapore coming in. It is probably going to expedite the integration 
process but there is still a couple of years of solid work that needs to be 
done before the thing starts earning what it
should be."
Mr Smith said it made sense that Air New Zealand had a large shareholder 
which knew how to run an airline and was committed to the industry as 
opposed to one which was an asset manager, such as Brierley.
"But realistically Singapore is not going to be sticking in extra capital 
and how can they under the A and B share structure?
"But Singapore does give them extra access to systems, operations, people 
and certainly there is some surplus capacity that is expected to come out of 
the Singapore fleet at the end of the year which the
domestic and international businesses of Ansett would easily be able to 
use."
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