Airport shares grounded as councillors deliberate

By CHRIS DANIELS

Trading in Auckland International Airport shares has been halted today while Auckland City councillors decide whether prices offered by the world's institutional investors for its stake are good enough to take.

With city councillors, officials and advisers all in possession of potentially price-sensitive information, the Stock Exchange yesterday announced a trading halt in the company's shares till tomorrow.

The airport company said trading would not resume until the results of the council's deliberations were known.

Councillors may decide tonight that the results of the past two days of "book building" - soliciting offers from interested buyers - have only flushed out enough interest to warrant selling a portion of the council's 78.1 million shares, or 25.7 per cent of the company.

Reports indicate that the book-build has turned up offers ranging from $4.80 to $4.85 a share - a discount of up to 7.5 per cent on the present market price and well below a supposed psychological barrier of $5 a share.

Sharebroking firms value the airport company at $5.80 to $6.10 a share.

Deciding to sell only part of its stake would complicate matters for the council, as it will have to go back to those investors contacted during the book-build and ask them to confirm their earlier offers, as these were based on the expectation that the whole stake would be sold

The price offered for the shares may well drop if a partial sale is revealed, due to the continued existence of an "overhang" caused by the remaining unsold council shares.

The chairman of the council's working party organising the share sale, Doug Armstrong, said all options, including a partial sale, were on the agenda.

He had not yet heard of the results of the book-build.

Councillor Bruce Hucker, spokesman for the eight councillors who oppose the sale of the shares, said the pro-sale councillors now found themselves on the horns of a dilemma.

This was caused by a wish to sell the shares by Christmas, but only at a price that would save face.

The chances of the council obtaining top dollar for the shares were dropping and preparations were underway for a fire sale, selling the shares at a discount, said Hucker.

Latest council figures showed that the average annual income from the shares was 8.96 per cent and the average annual capital gain had been 33.46 per cent since they were issued in 1998.

Hucker said he hoped that commercial sense would prevail.

Airport shares closed up 6c yesterday at $5.16.