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Air NZ's $2.2b capital rescue deal: Bookbuild begins

Author
Grant Bradley, NZ Herald,
Publish Date
Wed, 4 May 2022, 9:42am
(Photo / Getty Images)
(Photo / Getty Images)

Air NZ's $2.2b capital rescue deal: Bookbuild begins

Author
Grant Bradley, NZ Herald,
Publish Date
Wed, 4 May 2022, 9:42am

Air New Zealand will sell the remainder of its rights offer shares in an institutional bookbuild today.

The airline says about 88 per cent of the new shares - $1.045 billion were taken up by eligible shareholders.

Overnight a bookbuild began of approximately 274 million shares which were either not taken up by eligible shareholders under the two for one rights offer or were those which related to ineligible shareholders.

This is like an auction amongst the large brokers and institutional investors, and any premium over the $0.53 rights price will be returned to those who originally owned the rights.

Air New Zealand chair Dame Therese Walsh said the airline was ''very pleased'' with the level of take-up.

Applications were received for a further $71 million in oversubscriptions from existing shareholders applying for more shares than their allocation.

The offer was underpinned by 51 per cent owner, the Government, which bought $602m in shares to maintain that stake. Part of the proceeds of the raise will be use to repay loans the airline raised from the Government to negotiate the pandemic.

"We're very pleased with the level of take-up. We thank our shareholders for their support so far, including the Crown which will maintain a majority shareholding,'' Walsh said.

The airline has applied for a trading halt which will start before the market opens today while the bookbuild process takes place.

The rights offer is part of a $2.2b capital rescue plan and the Government is also providing a $400m backstop loan as part of the $1b in debt that will now be raised.

Air New Zealand chief executive Greg Foran said the airline continues to see encouraging signs in recent passenger booking activity on short haul and international services as a result of New Zealand's border reopening to Australia and visa waiver countries.

The airline had forecast a pre-tax loss of $800m for the full year.

"If these signs continue through to the end of financial year 2022, and there are no additional adverse impacts on the business, Air New Zealand's losses before significant items and taxation for FY22 could be better than currently expected.

"However, the macro-economic environment remains uncertain as a result of the disruption caused by the impact of Omicron and other Covid-19 variants, and the current conflict in Ukraine. Continued volatility in jet fuel prices is also a risk to any business.