KEY POINTS:
They've won over the shareholders - now they just need to convince the Government. Would-be big airport investor Canadian Pension Plan Investment Board (CPP) will this week try to convince ministers David Parker and Clayton Cosgrove that a 40 per cent stake in Auckland Airport will not give
them "control" of the strategic asset.
Last week, the Government put a temporary dampener on the bid by introducing stricter controls on foreign ownership of "strategic assets".
But a majority of shareholders have given the buy-up their blessing, with 57 per cent of those who voted in favour of the bid.
The Canadians won acceptances for 63 per cent of shares in the airport, more than they need to raise their total stake to 40 per cent. But the long-running saga is not over yet - now the partial takeover needs approval from the Government and Overseas Investment Office (OIO).
CPP vice-president Graeme Bevans said the Canadians would "obviously" be surprised if their bid was rejected this far along the process. Since the Government tightened the rules last week, CPP has been at pains to ensure the proposal would not be seen as passing the airport into foreign control. It has voluntarily agreed to limit its influence over airport operations.
"We've been very pleased with the acceptances and the vote in favour, which have been very supportive of the position we've taken in reducing our influence," said Bevans.
"There will be three independent directors, three appointed by [infrastructure investment company] Infratil, Auckland City and Manukau City, and only two appointed by CPP, so our ability to influence the company is quite limited."
CPP has also restricted itself to 24.9 per cent of the voting rights, "below the hurdle at which the OIO would normally consider an investment," Bevans believed.
He said CPP's application to the OIO would be finalised next week, and the OIO will then make a recommendation to the ministers, who have the final say.
Bevans has not received any indication about when a decision would be made.
There is no statutory timeframe for a decision, however a spokesperson for Cosgrove told the Herald on Sunday a decision would be made as soon as possible. CPP is thought to need a decision by April 11 or the offer will lapse.
If the Government rejects the deal, CPP can seek a review by a High Court judge. The Government has previously expressed concern about the airport passing into foreign ownership. Even before it raised the hurdle of foreign control, it removed some of the tax advantage of the Canadians' proposal by plugging a legal loophole involving the tax deductibility of stapled securities. CPP had proposed stapled stock instruments as part of its plan.
Big shareholders Manukau and Auckland cities have said they do not want the sale to go ahead, but Infratil, which had opposed the bid, changed its mind when the Canadians agreed to limit their influence.
The Canadians offered $3.65 a share for their chunk, an offer that grew more appealing as the sharemarket slid.
Because CPP has been offered more shares than it needs, shareholders who accepted the bid will be left with just under a third of their shares, as acceptances are scaled back.
Shareholders who accepted CPP's offer will get to sell a percentage of their shares into the offer, based on the final level of acceptances divided by the number of shares CPP needs (39.2 per cent).
