KEY POINTS:
Canadians pursuing a 40 per cent chunk of Auckland International Airport urgently want answers from the Government to determine the impact of tightened foreign ownership rules.
Yesterday the Canada Pension Plan Investment Board said it was not only confident of the offer succeeding, but was also optimistic about overseas investment approval, despite Monday night's pre-emptive strike and growing Government hostility towards the deal.
Investors were not so confident, dumping the stock and sending shares down 49c, or 19 per cent, when the market opened. Shares recovered to close at $2.24c, down 24c from Monday's close.
While the board is looking for quick answers, preferably before the March 13 deadline, CPPIB infrastructure chief Graeme Bevans conceded there had been no direct contact since last August.
"Since DAE (Dubai Aerospace Enterprises) the Government has refused to meet with anyone in relation to the airport. We would like to meet with Dr Cullen to ascertain the intention of the announcement," he said.
On Monday, Finance Minister Michael Cullen moved to tighten up overseas investment criteria in response to the CPPIB bid.
A new regulation affecting the Overseas Investment Office means ministers will have to take into account whether the investment will, or is likely to, help keep New Zealand control "of strategically important infrastructure on sensitive land".
Bevans said political sensitivities had been anticipated and the bid had been tailored to try to negotiate a course through them.
"We see that the Government is right to clearly state the basis on which it will review our application. Infrastructure assets are always politically significant."
CPPIB was focused on assuring the Government control of the airport would not be passing into foreign hands.
CPPIB had from the outset carefully structured its proposal to take into account that the airport was a sensitive asset of national importance, he said. He said Auckland Airport's board had approached the pension fund late last year asking it to make a full takeover offer.
"We declined because of our belief that it is appropriate for us to have only a non-controlling interest. We have always been clear that our desire is to hold a minority stake in the airport, not a controlling one."
Bevans would not be drawn on the timing of the announcement, just 10 days out from the offer deadline, saying only: "Quite clearly investors would like to know OIO ruling prior to the closing of the offer".
It is the second time in a week that the Government has made a move that affects the CPPIB bid.
Last week the Government plugged a tax loophole involving stapled stock instruments that are part of an airport amalgamation proposal.
While Bevans chose his words carefully, the target company's board chairman was more direct.
"I think it's really unfortunate that once a takeover bid starts the rules are changed mid-stream so that neither the bidder nor the target knows what the rules are and how it is to be played," Auckland Airport board chairman Tony Frankham said.
"We are seeking clarification from the OIO as to the timing of the delivery of the minister's decision because we think the market warrants having some certainty - especially given how the share price was affected today."
Bevans said the CPPIB offer was "irrevocable and it's live".
The intention was always to be a long-term minority shareholder without a controlling interest.
Auckland Airport has spent $13 million on legal, accounting, tax, financial and public relations advice plus independent adviser and printing costs associated with takeover bids last year. Bevans would not put a figure on the CPPIB's two bids, saying only they were "significant".
The plunge of the company's share price - at one stage by nearly 20 per cent - had made the $3.65 offer even more attractive, he said.
Bevans said he was 80 per cent confident of market bid success and even with the more stringent OIO tests said: "I am not sure that confidence level has changed."
Auckland City Council has nearly 13 per cent of the airport and mayor John Banks said the Government's move was "entirely predictable given the smoke signals that were seen from Wellington at the time of the short shrift for the Dubai investors".
"When the Canadians arrived in town with suitcases full of money it was only a matter of time before this Government in election year said 'no'."
Banks said moves to tighten OIO requirements were part of a "whole sorry saga" helpful to Auckland City's goal of preventing the airport from being sold. "My advice to the chairman and directors is to knuckle down and do the hard work, get the business growing and put to one side all of those people arriving to pick up cornerstone stakes."
