KEY POINTS:
The Mounties aren't ready to ride back to Toronto, tails between their legs, to explain to their masters why they couldn't pull off de facto control of Auckland International Airport.
The Canadian Pension Plan Investment Fund (CPPIB) has said sweet-all since Auckland Airport chairman John Maasland announced his board (voting 4:1) had cancelled the funds amalgamation proposal giving the CPPIB 39 to 49 per cent of the shares in a newly listed airport company.
At first blush it looked as if the Mounties would follow the Camels (Dubai Aerospace) off the Auckland Airports chessboard after Maasland stopped play on Wednesday, leaving the way clear for Lloyd Morrison's Infratil combo to call the shots.
The Canadian Fund issued a bog standard statement expressing its disappointment and signalling it would consider all options.
But the semaphore emitting from the Mounties camp suggests the fund will not pack its bags lightly and leave the field clear to the Morrison-related interests.
What the 10-strong Canadian team is doing is studying the rationale in the Auckland Airport press statement and Maasland's subsequent media comments to see if they can find a chink to underpin a subsequent challenge.
They're aided by UBS's Andy Coupe, who is a sharp inside player and PR-maestro Michael Dunlop.
The Canadian's options are not straightforward.
But they will derive succour from the views of dissenting airport director Mike Smith, who wanted the funds proposal put to a shareholder vote.
The Canadians' decisionmaking will be sharpened by the fact that independent valuer Grant Samuel and the airports own adviser First NZ Capital favoured the funds proposal, which had a grossed-up value of $3.90 a share for a minority stake in the new listed company.
The critical issue for existing major shareholders is that after two failed merger attempts they are now locked into a company whose board has no Plan B, or Plan C to deliver greater financial returns to shareholders. These concerns will no doubt be aired at the November 20 annual meeting once it gets down to the general business session.
Shareholders typically take it out on directors when they are upset over board decision-making but their options are slim. Three directors: Maasland, Tony Frankham and Keith Turner are not up for rotation.
If the Canadian proposal had still been in play, Smith would have stayed on board to see it through. But he has now decided to hold to his original plan to stand down.
This leaves director Joan Withers in the spotlight.
The Dubai camp believed Withers (who is also Fairfax NZ chief executive) wavered on their proposal after Cabinet minister Phil Goff raised the political stakes against their bid.
She may face scrutiny at the meeting.
Three other nominations have been received: Property developer Richard Didsbury, who is Auckland City Council's nomination as an independent director; John Brabazon, Manukau City Council's nomination, and Morrison.
Didsbury and Brabazon will have the backing of the two respective councils which between them control 23.75 per cent of shares. But they may face opposition from institutional shareholders who do not believe the councils should be nominating directors.
Morrison's position is the most interesting.
Maasland has already pointed out to Morrison that he has a conflict of interest.
The existing directors oppose his appointment on three grounds: Morrison's directorship of Wellington Airport, which they believe is a competitor; Infratil's push for a second Auckland Airport at Whenupai, which they believe would be in direct competition with Auckland Airport; and their belief that a possible acquirer of Auckland Airport should not be sitting at the board table.
The latter point is the most controversial.
Suspicions remain that Morrison deliberately scuttled Dubai's bid by strategising to come onto the register via a push with the NZ Superannuation Fund.
Smith had been outraged that Morrison was lining up to get Auckland Airport on the cheap after raising the national interest stake.
Morrison did not return calls yesterday but has denied Maasland's claims.
Auckland Airport shareholders do need to put Morrison's feet to the fire on this one.
His company has invested in a swag of second-tier airports in Europe which have not been stellar performers. His opposition to foreigners doing the same here smacks of self-interest.
The shareholders might also care to probe the nature of any discussions between Brabazon, who formerly chaired Manukau City Investments, and Morrison.
Market scuttlebutt suggests the former had favoured Morrison's view that the airport should start a new process to get a substantial minority holder on board.
The AGM will no doubt spark considerable board questioning over the Canadian deal.
But if the Mounties want to really put acid on directors, they need to engineer a special meeting.
Under section 16:2 of the airports constitution, a written request to the board from interests holding just 5 per cent of the voting rights will suffice.
The critical issues are these:
* Why did the airport board refuse the Canadian proposal when it approved the Dubai deal which would also have pushed debt levels and resulted in a BBB- credit rating?
* Why did the board not put the deal to shareholders when it was prepared to put the similarly valued Dubai deal to the vote?
* Why was the Dubai deal cited as a comparison when it is no longer on the table?
* Why did the airport directors discount the funds management capabilities and experience when it has been represented at board levels on other major infrastructure investments?
* Why has the board not got a Plan B or Plan C to deliver better financial returns to shareholders, particularly as shares are now back to $2.88 compared with the grossed up $3.90 attributed to the Canadian bid?
* What role did central government considerations play in the board's decision-making and were directors lobbied on this score?
As for the fund, it will have to assess whether its tactics have left it backed into a corner - unable to progress via amalgamation or through an on-market takeover, which is the option it should have taken in the first place.
