Shares in airport take flight

By CHRIS DANIELS aviation writer

Overseas investors have snaffled most of the 12.8 per cent share of Auckland International Airport sold by the Auckland City Council yesterday.

Shares in the company, considered one of the New Zealand Stock Exchange's blue chips, closed up 13c, finishing the week at $5.29.

City councillors voted 11 to 8 on Thursday night to sell a little over 39 million shares to 55 institutional investors, three-quarters going abroad, the rest staying in New Zealand.

Brokers reported yesterday that local institutional investors were unhappy at the number of shares they were able to buy.

Many expect a stronger share price in the next few months as institutions still left with their portfolios underweight in airport shares move into the market to buy.

The cloud of the depressing overhang caused by the council's 25.6 per cent stake being on the block is now removed, with it announcing that it will not sell its remaining 12.8 per cent stake for two more years.

Any trade buyer will have to also promise not to sell the shares until the two-year no-sale period expires. They may be sold, however, as part of a takeovers code offer.

Councillors, including Mayor John Banks, have always said they wanted to sell the council's entire holding of 25.6 per cent, but they eventually decided to sell only half.

Banks said the council could have sold all of the shares for $4.85. Last-minute calls to institutions during the night secured $4.90 a share for the 38-million-share half stake.

Sale opponents are claiming the half-sale as a half-victory, saying councillors were afraid of the political backlash of selling the entire airport holding at such a discount.

In a "questions and answers" document produced by council public relations staff, the question is put that if the price was so good, why were all the shares not sold?

The answer given by council to its own question is that it simply did not need to sell all its shares, partly because of the good performance of the company - including a recent $54 million capital repayment.

Banks says the proceeds of the sale will go to make the council debt free, thus releasing money for transport and other projects.

Latest council figures showed that the average annual income from the shares was 8.96 per cent and the average annual capital gain had been 33.46 per cent since they were issued in 1998.

The council did not pay anything for its shares, which were given when the Government sold its 50 per cent stake in the airport in 1998.