Ex-Tasman Pacific directors blame Qantas for pulling out

Friday 3rd August 2001

By Campbell McIlroy

ON THE WEB

The Tasman Pacific directors' and the liquidator's report are available at www.nbr.co.nz

The directors of collapsed airline Tasman Pacific have revealed how close Qantas came to rescuing its New Zealand franchisee before it backed away from a rescue bid.

They believed up until midnight on April 20 Qantas would not let Qantas NZ fail but, within three hours Qantas was out, a final last-ditch rescue package involving creditors had failed and receivers were called in.

A four-page Tasman Pacific directors' statement said Qantas Australia gave undertakings to Qantas NZ creditors it would meet their debts, and even paid some. The directors said they saw this undertaking as a sign of Qantas' good-faith negotiations with a view to the Australian company buying the business.

The directors approached Qantas in March when the company's financial difficulties became critical to see if it was interested in buying the airline.

"That approach was positively received so a due diligence process was commenced by them," the statement said.

Qantas was even meeting its New Zealand franchise's costs while it carried out due diligence.

The directors have publicly claimed they understood Qantas would sign the deal right up to the last minute.

Sources within the company said under the deal everyone would have been paid but the directors would have lost all their equity, about $40 million.

One analyst said yesterday the directors were just fighting for their professional reputations. But their reputations are not being helped by the appearance of a $15.8 million debt to parent company Zazu in this week's liquidator's report.

Montgomery Associates principal Bernard Montgomery yesterday questioned why the advance was not recorded in the receiver's report but has suddenly appeared in the liquidator's report.

He said the advance together with the $4.5 million inter-company loan gave the shareholders about 20% of the vote.

Liquidator Arron Heath said the advance had always been in the accounts but had probably been recorded as shareholder funds by the receiver.

He did confirm the loan would give Zazu voting rights at the creditors' meeting if it filed a claim. But he said the inter-company loan was to Southern Skies Properties, which was under the control of the receivers who would hold the voting rights for that debt.

Mr Montgomery also questioned why the liquidators had applied for a court order to stop the creditors' list from being made public when it had already been released by the receivers.

"A cynic might think it is an attempt to stop creditors from lobbying for votes to replace the liquidator ahead of the creditors meeting," he said.

Mr Heath disputed Mr Montgomery's claims, stating that under the act there was no power to release the list without a court order.

"We have taken the initiative and asked the court to give us some direction on it. The court has appointed two QCs to argue for and against, but we don't have any position one way or the other," Mr Heath said.

He also said under liquidation regulation 24 a liquidator is not allowed to solicit for proxies. But he said there was nothing to stop creditors from doing so and the list of trade creditors was available for them to do that.

Mr Heath said the liquidators had applied for a priority fixture that should be heard before the creditors' meeting on August 14.

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