Complex flight path to recapitalisation

Air New Zealand's flight path to recapitalisation has moved to a Federal Court hearing in Melbourne to decide whether the company's payout for worker entitlements after the collapse of subsidiary Ansett is acceptable.

The hearing has been set down for early next week.

The timeline for the national carrier's journey to recapitalisation is:

* Next week: The new-look Air New Zealand board is expected to meet for the first time. It will consider management's new business plan involving reduced flight schedules.

The board will also consider payouts to former directors, and reducing current directors' fees.

An eighth director has yet to be appointed to the board and there is no timeframe for that appointment.

* Wednesday: The deadline for the company to receive confirmation of ongoing support from its banks and financiers and to satisfy the Government that it has limited its exposure from the fallout of the Ansett collapse.

* Friday: The deadline for the company to reach an agreement with the Ansett voluntary administrator (subject to the approval of the Federal Court of Australia and the Ansett Committee of Creditors) on providing intellectual property to assist the administrator "to carry on the Ansett business as long as it is not detrimental to Air New Zealand".

* October 19: The deadline for completion of the first phase of the recapitalisation programme, which involves:

1) A $300 million Government loan to the company, of which $A150 million ($183.1 million) will be paid to the Ansett Group to settle potential claims against Air New Zealand, with the balance being used for working capital;

2) Air New Zealand dropping claims against Ansett for about $A160 million.

* December: The likely date for the company's annual meeting (deferred from October 30). The meeting will also focus on approving the recapitalisation.

An independent appraisal report will be sent to shareholders before the meeting. The deal depends on a 75 per cent supporting vote from shareholders attending the meeting.

Approval seems almost certain because Brierley Investments and Singapore Airlines, who together hold 55 per cent of the shares, are committed to the deal.

* January 31: The second phase of the recapitalisation programme is due to be completed. It involves:

1) The company repaying the Government's $300 million loan (plus interest) by issuing it new convertible preference shares (the price for those new shares has yet to be set).

2) The Government investing up to a further $585 million through buying new ordinary shares in the company.

3) The company's existing A and B shares will be reclassified into one class of ordinary shares.

Brierley Investments and Singapore Airlines will retain their current shareholdings until at least this date.

Changes to the board are expected at this point, with further Government appointments likely, reflecting its shareholder weighting.

* January 1, 2005: The final date for the Government's convertible preference shares to be converted to ordinary shares.

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