Air NZ unlikely to rush into latest rights issue

By DANIEL RIORDAN aviation writer

Air New Zealand may wait as late as early September, when it is due to release its June-year profit results, before going to the market with a rights issue.

Investment banks have been pitching to the airline for the issue, but the Business Herald understands a rights issue is not imminent.

With a month and a half typically needed to ready an issue for market once the issue handlers have been chosen, it would be July before the airline could pull the trigger, said one senior broking source.

Air NZ spokesman David Beatson yesterday declined to comment on speculation that an issue was planned within weeks.

The last time the company talked about the matter was in mid-March when chief executive Ralph Norris said the airline would consider a rights issue of around $200 million in four to five months (July/August).

But with the airline in no urgent need of extra capital, it was unlikely to go through the laborious process of preparing the detailed financial forecasts needed for a rights issue prospectus too close to the release of its full-year results.

Those are due in early September if the airline sticks to the reporting schedule indicated by the early March release of its half-year results.

The airline said two weeks ago it expected to break even on an operating basis this financial year.

The Government, which owns 82 per cent of the airline after completing an $885 million rescue package in January, has pledged to provide a further $150 million if needed, and has made it clear it prefers that contribution to be as part of a pro rata rights issue.

The airline is reviewing its domestic operations and some of its short-haul international routes (less than four hours). It is expected to turn its attention to its longer routes after that.

Air NZ's last rights issue, for $284 million, was handled by Macquarie Bank and JBWere.

The controversial issue, needed to help fund the acquisition of Ansett, closed in November 2000 undersubscribed by $19 million.

Air NZ savagely downgraded its profit forecasts two days before the rights issue closed.

The Securities Commission and the Market Surveillance Panel investigated the matter but found no grounds for reprimanding the airline.

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