Govt not considering selling any more of Air New Zealand - Cullen

By NZPA

Wednesday 5th March 2003

The Government today hotly denied a Dominion Post report it was mulling selling part of its stake in Air New Zealand.

"It is completely, 180 degrees wrong," a spokeswoman for Finance Minister Michael Cullen told NZPA.

Any thought the Government might allow its stake to be diluted as part of a long-planned rights issue -- something that was talked of as an option when the Governmental bailed the airline out at the end of 2001 -- has since been rejected.

"Subsequently, it has decided the Government is going to maintain its holding," the spokeswoman said.

A Dominion Post report quoting government sources said the "stake" would be worth about $160 million.

The Government had 82 percent of Air NZ when it bailed the company out with an $885 million injection. That has since been diluted to 78 percent, with Qantas talking an initial 5 percent holding of effectively new shares, as part of its proposal to buy 22.5 percent of the airline.

Should regulators allow the Qantas proposal to proceed, the Government's stake would dilute to 64 percent because of the expansion of the share base.

Qantas paid $98.2 million for 220.76 million redeemable convertible notes which cost 44.5 cents each, the equivalent of 5 percent of the airline.

Air New Zealand last week confirmed that it was planning a rights issue for about $200 million by the middle of this year to further shore up its balance sheet. A 1-for-8 rights issue at 40 cents, compared with Air New Zealand's share price of about 51c, would raise $220 million.

The Government, as part of the original bail-out agreement, has committed another $150 million to Air NZ if the airline asks for it by June 30. If the Government took up its full rights entitlement it would have to stump up $172 million.

The Dominion Post's sources said the Government was evaluating a proposal to sell down part of its holding to the public, rather than injecting more money into Air New Zealand. Qantas would not be allowed to buy any of the shares.

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