Crash landing for big investors

By DANIEL RIORDAN

Air New Zealand's biggest shareholders have taken a bath on their investments in the national carrier.

Singapore Airlines paid $496 million for what was a 25 per cent stake but will be a 4.3 per cent stake if the Government rescue package goes ahead as planned.

At yesterday's closing price of 26c, Singapore's 189.2 million B shares were worth only $49 million - a $447 million loss for the company.

Figuring how much Brierley Investments has paid for what was a 30.3 per cent stake but will soon be 5.1 per cent is more difficult because it has been an active buyer and seller since becoming an investor in 1988.

A best estimate, based on the carrying price of its Air NZ shares from last year's Brierley annual report (and adjusting for Air NZ's last rights issue in November), is $557 million.

Those 229.5 million A shares were yesterday worth $64 million - a $493 million haircut, although Air NZ's generous dividend payments take some of the sting from that loss.

The airline has paid $760 million in dividends since 1990, and Brierley has probably gobbled between a third and a half of that.

Brierley and Singapore will not be putting more money into the airline, but have undertaken to support the deal and retain their current shareholdings until at least January 31.

Few expect Brierley to stay in past then. The Brierley representative on the new board is Bill Wilson, QC, who does not work for the company but chairs BIL NZ Assets, the local company which Brierley uses to hold its shares.

Singapore - a renowned long-term stakeholder in any corporate situation - might stay to maintain a toehold, said analysts. The value of its stake was now so low that there was little point in exiting.

In a statement, the company said: "Singapore Airlines believes that the agreements reached between the various parties are the best way forward for Air New Zealand under the prevailing circumstances."

Brierley shares fell 2c on the deal's announcement to 37c. Investors who had piled into Brierley while Air NZ shares were suspended were largely absent.

Singapore shares jumped more than 4 per cent on the Singapore exchange as the rescue package was announced.

They closed the day up 45c at $S8.95 as investors showed their relief that the airline did not have to contribute to the package.

But analysts noted that Singapore's rally was likely to be short-lived because of slowing global economies and the impact of the terrorist attacks on New York and Washington.

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