Air NZ calls halt on share fiasco

By DANIEL RIORDAN aviation writer

Air New Zealand shares have been suspended indefinitely at the airline's own request.

After a week of uncertainty on the sharemarket, the company asked the Market Surveillance Panel to suspend its shares, "in the best interests of the market until a comprehensive announcement can be made."

The panel will reconsider the suspension on Monday night, but has indicated that it will keep it in place until a rescue package for the airline is finalised.

The panel had halted share trading before the market opened yesterday, after comments about Air NZ's share price the previous evening by Air NZ director and Brierley Investments' head Greg Terry.

On Wednesday comments from Prime Minister Helen Clark advising shareholders to hang on to their shares prompted a five-hour halt.

While the panel investigates the company's record of market disclosure going back to last year, the Securities Commission has outlined the terms of reference for its inquiry.

The Australian Stock Exchange suspended trading in the shares two weeks ago and does not intend lifting that suspension until the market is better informed.

Asked why local trading had not been suspended two weeks ago, panel chairman Bill Falconer said it was "not the New Zealand way of doing things".

"We have put the trading halts on when the information came from insiders, the Prime Minister and Greg Terry, on the basis the company should take responsibility for that and we should get that clarified.

"But the view is that even though the situation is evolving we shouldn't take away from people the right to trade in their shares, even though it's a matter of their own judgment how to deal with the uncertainty."

Air NZ's acting chairman Dr Jim Farmer said the airline continued to make progress on its rescue package.

He acknowledged the market was "anxious" to obtain further information on the recapitalisation efforts, but said those discussions could be prejudiced by "premature, incomplete disclosure".

He said negotiations would continue over the weekend and the company hoped to make an announcement early next week.

He also rejected a Dominion newspaper report claiming Air New Zealand had failed to repay a $70 million ANZ Bank loan, which fell due on September 20.

"The facts are that the loan was replaced by a new loan facility, agreed with the ANZ Bank."

He said the company had been in close discussions with all its banks following the $1.3 billion write-off of its investment in Ansett on September 13 and none of the company's lenders had recalled any of their loans.

Dr Farmer said he had no knowledge of any connection between the ANZ Bank loan and the resignation of ANZ chairman Charles Goode from the Air New Zealand board on the day the renewal was agreed.

Dr Farmer also said the company's operating cash flow (excluding Ansett) had been positive during July and August.

Mr Terry had said shares would quickly climb to 60c if there was an announcement the airline would continue flying. The shares had climbed during the week to 40c when he made his comments.

Under a rescue plan announced on September 13, Brierley Investments and Singapore Airlines committed $150 million each to a rescue plan and the Government pledged a $550 million loan.

The bailout was conditional on a viable business plan, due diligence and the merging of the airline's share classes.

The Securities Commission said its inquiry would focus on:

* Media reports that the Prime Minister's Office approached broking houses regarding possible steps to be taken by the Government in relation to Air NZ.

* Media reports attributed to people who appear to have had price sensitive information.

* Stock Exchange decisions to halt share trading on September 26 and then lift the trading halt; and to halt trading yesterday.

* Share trading before, during and after the "relevant period" (September).

* Any other material matter arising from or in the course of the inquiry.

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