By GEOFF SENESCALL
Singapore Airlines chief executive Dr Cheong Choong Keong was in Auckland yesterday putting the final touches to a deal to buy 25 per cent of Air New Zealand ahead of a possible announcement today.
Also in the city was Greg Terry, the head of Singapore-based Brierley Investments, which is
negotiating to sell a 17 per cent stake in Air New Zealand to the Asian carrier.
Both were then expected to talk to Government officials in Wellington because the Government owns what is called a kiwi share in Air New Zealand and negotiates international landing rights on behalf of the airline.
A foreign carrier can own just 25 per cent of the airline in order to protect those rights.
And foreign investors can hold only the unrestricted B shares in Air New Zealand, making up 49 per cent of the register.
Brierley - which controls Air New Zealand through its 47 per cent shareholding - can deliver a 17 per cent stake to Singapore.
In enticing Singapore on board, Brierley is likely to have made concessions which will give influence to the Asian airline. Singapore will want board seats - possibly the role of chairman currently held by Brierley chairman Sir Selwyn Cushing.
Doing a deal with Singapore will finally give Brierley an exit strategy from Air New Zealand, an asset it bought from the Government in 1990.
It will also provide Air New Zealand with a strong partner as it looks to bed down its recent purchase of the remaining 50 per cent of Ansett Australia from News Corporation.
Bringing Singapore on board should be viewed favourably by the market, which to date has had reservations about Air New Zealand's capability of adequately driving its new investment.
A further dampener on Air New Zealand is that it has to raise up to $290 million from shareholders to help fund the purchase of Ansett. It is tendering merchant banking firms to handle the rights issue.
With Singapore on side, it could underwrite any such issue. Alternatively, Singapore could take a direct placement of shares. Whatever the case, Singapore's aim will be to raise its holding in Air New Zealand to 25 per cent.
Sealing an agreement with Air New Zealand is likely to kill off Singapore doing a deal with Sir Richard Branson in Australia, where he is planning to set up a new Virgin airline operation.
