Auckland airport to raise $150m locally

Auckland International Airport is raising up to $150 million on the local debt market as it looks to pay off money borrowed to make a special payout to shareholders.

Only New Zealand wholesale investors and NZX participants will be eligible to apply for the bonds. There will be no public pool, so anyone wanting to buy the bonds must register their interest and make arrangements with NZX members to buy the bonds from them.

Bonds of seven and 10 years are being offered by the company.

With a prospectus intended to be registered on October 26, the offer will be open from October 31.

The interest rate should be set on November 3.

Proceeds from the bonds will be used to refinance part of a bridge facility arranged as the recent special distribution to shareholders.

The company's share price has risen more than 11 per cent this year, as record visitor numbers continue and it keeps dishing out extra money to its shareholders.

Profits for the past year were up 12 per cent on the previous year, at $105.6 million.

In June, the company said it would be giving up to $200 million to shareholders and increase its ordinary dividend payouts.

This was made up of a special dividend of 12c a share - which accounted for $146.7 million, coupled with a $53 million on-market share buy-back.

It is the third time in five years the company has made a special distribution of money to its shareholders.

In 2000, it paid out a $23.1 million special dividend and then made a $212.7 million capital repayment in 2002.

In August last year, it lifted its dividend payout policy from 80 per cent to 90 per cent of after-tax profits.

All the payouts are part of the company's policy to increase debt, which has a lower cost than equity, while maintaining a strong balance sheet to finance the airport's continuing capital expenditure and investment programme, as well as ordinary dividends going forward.

A share buy-back and capital return to shareholders have provided ammunition to the airlines, which object to any increase in landing charges while the airport company is making a lot of money.

Big money is due to be spent at the airport over the next few years, with plans for a new runway and a new domestic terminal. The airlines and airport are frequently at loggerheads over how these developments will be paid for.

Countering criticism from the airlines of over-charging, airport chief executive Don Huse said in August the company was successful because it was "an efficient and effective business with interests not only in aviation, but also significantly in retail, carparking and property".