KEY POINTS:
Tens of thousands of Auckland International Airport shareholders will know by Friday whether they will be paid almost $1.8 billion by the Canadian pension fund.
The Canada Pension Plan Investment Board has a conditional 40 per cent share of Auckland International Airport but Land Information Minister David Parker and Associate Finance Minister Clayton Cosgrove have to consider "whether theoverseas investment will, or islikely to, assist New Zealand tomaintain control of strategically important infrastructure on sensitive land".
Under Overseas Investment Office rules, the ministers are also considering whether the CPPIB passes the public benefit test whereby the buyers must demonstrate a real and identifiable benefit to New Zealand.
Friday is the deadline for the ministers, who have been wading through the 1000-plus page application since Easter.
IF THE GOVT SAYS YES
Pay day for shareholders
If the minister say the deal can go ahead, cheques are sent out within seven days of it becoming unconditional.
While supporters of the deal say the decision is a no-brainer as the Canadians have ceded voting control, it is tricky political terrain for the ministers whose political seniors have made clear their thoughts about it.
If Parker and Cosgrove do say yes, they will be faced with a challenge of explaining the intricacies to their left-leaning constituency who oppose the sale and would have delighted in National leader John Key's squirming in response. They would wonder why 40 per cent of the airport was sold to a foreign investor.
If the CPPIB gets the nod, bid leader Graeme Bevans would take a seat on the board with another director with extensive airport experience.
IF THE GOVT SAYS NO
The Canadians go home
This would leave the 29,000 shareholders who accepted the offer about $600 million out of pocket based on yesterday's closing share price of $2.28.
But the Canadians have shown no signs of being quitters and walking away would break their behaviour pattern of the past year. In this time they have submitted two bids, both of which were rebuffed by the airport board and had to substantially modify the present bid.
They recalibrated the offer to reduce debt loading after analyst and shareholder concerns and shrugged their shoulders and undertook to change the terms of an amalgamation plan after Inland Revenue suddenly cracked down on their stapled securities plan. They scaled back voting rights to 24.9 per cent to comply with the overnight imposition of stricter foreign investment criteria.
If the Canadians give up, cornerstone shareholders would not be queuing up given the Government's stand on strategic assets. This would leave the airport to chart its own course.
The New Zealand Superannuation Fund could take a bigger stake and joint ventures be explored.
Off to court
A judicial review by a High Court judge would determine whether the correct process has been followed without relitigating the details of the deal.
Judges can take a dim view of regulation made on the hoof and this could present an opportunity for the Canadians. They have spent millions on this bid and more legal bills would not be a deterrent for the pension fund worth about $150 billion.
Buying 19.9% on market
What a difference a global credit crunch makes. December's $3.65 offer now looks remarkably generous in light of the current share price.
While it suited the Canadians to emphasise the premium while the bid was live, if it is knocked back they could save themselves a fortune. They would have to offer substantially less than $3.65, which would still be attractive to many investors.
