Forum Archive Index - October 2001

["Nick Kearney" <nk@xtra.co.nz>]

Snoopy

I had forgotten about this.  What I was getting at was the loan agreement
that Govt had arranegd with the AIRNZ.  Govt are still loaning AIR $150
million and I wanted to know if that was as shareholder or separate entity.

I don't know but I would find it unusual if it was as shareholder.

Anyone know?


Thanks

 nk

---- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Wednesday, October 24, 2001 2:36 AM
Subject: Re: [sharechat] AIR NZ


> Hi nick
> >
> > Team
> >
> > There are undoubtedly some good commercial lawyers on this site.  I
> > have a question for them regarding the loan by the largest
> > shareholder (Crown) to the company (AIR NZ).
> >
> > If AIR NZ cannot pay back the loan by the due date as stipulated,
> > (and there is no guarantee that they will be able to), then where
> > does that leave the Crown as a shareholding entity viz a viz suing
> > the company for breach of the loan agreement?
> >
> > I have my own opinion and if someone else can espouse theirs I will
> > be greatly appreciative of that.
> >
> >
> Sorry, I am not a commercial lawyer and I realise that actual events
> have overtaken your question.  In other words the government is
> putting equity into Air New Zealand, not debt.  Still, no-one has
> answered your question so I will throw my hat into the arena.
>
> From a commercial point of view putting money into a company in the
> form of a loan where there is no guarantee how they will produce the
> profits to repay the interest (without even considering if they can
> pay the capital back) would have been a very risky prospect for the
> New Zealand taxpayer.  If Air NZ didn't repay, suing the company for
> breach of contract whether legally likely or not would be a waste of
> time.  Even if you successfully sue a bankrupt limited
> liability company you will get no money even if you win the case.
> So suing would be pointless.
>
> Putting taxpayer money in as equity is almost as risky.  It is
> slightly less risky if you consider that Air New Zealand won't be
> faced with a large interest bill because of the money going in.   The
> downside is that the government won't get a tangible return on the
> money tied up as new shares until those shares are (eventually) sold.
>  The upside is that if Air NZ does recover, the government will get
> its share of the increase in value.
>
> Speaking as a private invewstor, I wouldn't be keen on either
> proposal with Air NZ in its current state.   But then I suppose that
> is why the government has become involved!   As a taxpayer I am
> pleased the government have taken the equity option rather than the
> loan. SNOOPY
>
>
>
> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
> "You can tell me I'm wrong twice,
> but that still only makes me wrong once."
>
>
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