KEY POINTS:
Auckland International Airport shares were down 35c, or 12 per cent, to $2.48 in trading today on speculation a partial bid could be pulled after the Government moved to close a tax loophole.
The Canadian Pension Plan Investment Board (CPPIB) is seeking a 40 per cent stake in the airport in a complicated deal with a cash component, plus stapled securities comprising a mix of ordinary shares and convertible notes.
Companies can use stapled stock instruments to pay tax-deductible interest to shareholders as a substitute for dividends, creating problems for tax-gathering if the instruments are issued to foreign investors in New Zealand companies.
Last night the Government moved to plug the tax loophole involving stapled stock instruments, such as those being offered for the airport.
Stapled securities combine two or more securities, for example a unit in a trust and a share in a company, which then can not be separately traded.
The Government said its move yesterday was announced without consultation with interested parties because of growing interest in using the stapled stock instruments in this country following their international popularity.
CPPIB has offered $3.6555 per share, reducing to $3.5980 as a result of a 5.75 cents per share interim dividend being paid next month.
Just hours before the tax change was revealed yesterday, a CPPIB representative expressed increasing confidence about the likely success of the bid, following a change of mind by the AIA board.
Early yesterday, the airport directors announced they were unanimously urging shareholders to sell into the CPPIB bid, a reversal of their previous advice.
But lingering feelings that the offer price undervalued the airport's long-term value remained. The board was unable to agree on recommending shareholders actually vote for the partial takeover, the approval of which is vital for the plan's success.
Board chairman Tony Frankham said the recommendation to sell was made because of the current financial environment, with shareholders unwise not to sell part of their holding at the offer price if the deal went ahead.
But four of six directors had felt that in the longer term the value of Auckland airport shares was likely to be greater without CPPIB having a 40 per cent stake which gave it effective control.
- NZPA
