Forum Archive Index - December 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Nick NK,

Thanks for your answers to my questions.  Altough speculative, they 
do make sense.

I still find it hard to believe that socialist ideology can 
completely over-rule logic.  Then again, 2002 is election year, and 
a Labour-Alliance beat up of big business would be the "right look" 
on the hustings!

My guess is that you are right on the button with those banks having 
the government in a "full Nelson" over the loan terms.  I note that 
one of the conditions to the deal going ahead that has yet to be 
satisfied is:

"Air New Zealand's unsecured bankers agreeing to continuing their 
facilities (or repayment facilities) until at least 31st December 
2003 and the crown being satisfied as to the repayment profile of 
other financers."

Little has been said in the media about that condition, but how are 
Air New Zealand going to do it?  If I were an unsecured creditor in 
the airline industry I would want out, a.s.a.p.!  I imagine there 
will be some 'sweetener' for these creditors , which will be bad news 
for shareholders, announced at the AGM.

It is becoming obvious to me that even with the coming capital 
injection,  Air NZ is still dead- without government support.

>>
>> The proposed recapitalisation will ensure that the government gets
>> over 75% of the shares.  I know 50.1% means control, so what is 
>> the additional benefit offered if the controlling shareholder owns 
>> over 75%?  Anyone know?
>
>
>IT ENSURES, I THINK, THAT TE GOVERNMENT CAN SELL WHEN IT WANTS TO
>WHOEVER IT WANTS.  COMPANY LAW REQUIRES 75% VOTE FOR 'MAJOR
>TRANSACTIONS'.  WITH 50.1%, THE GOVERNMENT COULD HAVE NOT ENTERED
>INTO A MAJOR TRANSACTION WITHOUT APPROVAL FROM OTHER SHAREHOLDERS. 
>WITH 75%+ THEY CAN DO IT AT WILL THROUGH THEIR VOTES AT A SPECIAL
>MEETING
> 
>
I see the crown will end up with 82% of the shares if the deal goes 
through as arranged.  But what happens when an amount of shares equal 
to 10.5% of the shares on issue at is paid to Newscorp in 
two to four years time?  At that point, I calculate the government's 
equity in Air New Zealand reduces to 74.2%.   Hmmmmmm SNOOPY



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