BIL issues legal threat against Air NZ independent directors

Friday 8th June 2001

By Jock Anderson

Prime Minister Helen Clark yesterday dismissed a Takeovers Code "breathing space" exemption as a way to handle the Air New Zealand ownership fight.

Transport Minister Mark Gosche said he also doubted if, as Kiwi share-holding minister, he had the ability to intervene.

Air New Zealand spokesman David Beatson wasn't sure a "breathing space" beyond July 1 would be of use to the company and effectively rubbished media speculation surrounding the rumoured existence of a New Zealand-based consortium wanting to buy out Brierley Investments' 30% stake in the airline.

It is unlikely such a consortium exists.

Representatives of Air New Zealand and Qantas Airways - which wants 49% of the company - held talks in Auckland on Wednesday at Qantas' request and there would be further meetings soon, Mr Beatson said.

The National Business Review has learned that souring talks between the airlines is a letter from Brierley Investments chief executive Greg Terry which allegedly threatened the independent Air New Zealand directors with legal consequences if they acted in concert and detrimentally to any shareholders.

Mr Terry, the only Air New Zealand board member to vote against formation of the independent committee, reckoned independent directors should not have come together and formed their own group and warned them if they damaged any shareholders they could find themselves personally liable.

Investment banker Lloyd Morrison said Air New Zealand was a good business and the consortium idea was sound but categorically denied he or his company Infratil was involved in the mooted bid.

Mr Morrison said it was "loose" to speculate that The Warehouse owner Stephen Tindall might be a buyer.

"You need to be very focused and he has a lot on his plate. But it's a pity there isn't a decent New Zealand company to mop up the mistakes of others.

"I think everyone has such a downer on Air New Zealand. They've all got it wrong."

Mr Tindall refused to comment on media speculation that he was a possible buyer.

A major investment fund manager yesterday mooted a Takeovers Code "breathing space" exemption coupled with a heavily discounted Air New Zealand rights issue as a possible way to secure local control of the national carrier.

Alliance Capital head of equities Andrew Bascand said he would potentially consider investment in Air New Zealand and advocated a dilution of the BIL stake by means of recapitalising with a 50-60c rights issue.

"I don't see how you can make a profit from Air New Zealand just by buying shares in BIL," Mr Bascand said.

He said although there was a lot of marketplace talk there needed to be a full prospectus with forecasts and strategies.

"We have a strong view that under the new management there could be significant value in investing in Air New Zealand, provided the company was back on an appropriate capital structure."

DF Mainland head of research Bruce McKay said any institutional investors would be keeping their powder dry, considering their options but "everyone will be denying it."

Mr McKay said it was hard to see which local investors might be a buyer of the BIL stake in the relatively small New Zealand market.

"I doubt that is a goer," he said.

Asia-Pacific Risk Management partner Roger Kerr was sceptical there would be enough money in New Zealand to invest in the airline. "I don't think the people with the money are going to put it up to invest in Air New Zealand."

He said it was logical for the government to relax the foreign shareholding cap to allow Singapore Airlines to take a bigger stake.

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