Council sale of airport stake can proceed despite objections

By NZPA

Wednesday 23rd October 2002

Auckland City Council is on track to offload its quarter stake in Auckland International Airport by Christmas, although it has not made the final decision to sell.

The council said today that one option, selling its 25.6 percent stake to retail investors, was no longer possible as five councillors had not agreed to sign the necessary prospectus.

A general retail offer may have included a preferential allocation to residents and ratepayers.

Councillor and chairman of the airport working party Douglas Armstrong said 15 of the 20 councillors agreed to sign a prospectus needed for a retail sale, but the Securities Act required a unanimous decision.

Mr Armstrong said three of the councillors who would sign indicated their support for an offer to retail investors, while still being philosophically opposed to a sale.

The remaining five councillors were opposed to the sale and did not agree to sign the prospectus in protest at the proposal, he said. Attempts by NZPA to contact two of the councillors were unsucessful.

The council, which has not made a final decision on the sale, was able to proceed with a sale to trade and institutional investors, which does not require a prospectus.

"The offer was made to allow council members who were philosophically opposed to the decision to make a statement in any prospectus that we issued to that effect," Mr Armstrong told NZPA.

"We made application to the Commerce Commission to exempt ourselves from having to get every single member of the city council, in effect a director of the promoter of the sale, to sign the prospectus. They gave us a decision that said no, we want everyone to sign.

"I don't think it will affect price, and it certainly doesn't affect the decision to sell."

Mr Armstrong said today the council had not been committed to a retail sale, although it was one option.

"We're sounding out trade buyers, companies that are interested in the strategic nature of the stake, and we're also talking to institutions, and we're interested in getting the highest price for the ratepayer.

"We're thinking the whole process will be through by Christmas."

The council planned to use the money to reduce debt and improve infrastructure in the city. Its 108 million shares were worth $562 million at the current share price of $5.24.

Auckland Airport handles more than 70 percent of New Zealand's international arrivals and departures, and posted a 21 percent jump in profits last year, despite a difficult year for airlines and the international tourist industry.

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