Wellington announces bailout terms for Air New Zealand

SYDNEY, Nov. 27 Kyodo

The government of New Zealand will gain an 82% share in Air New Zealand under the terms of a bailout it announced Tuesday.

Finance Minister Michael Cullen said the government has agreed to pay NZ 27 cents a share in the second tranche of a NZ$885 million (about $364 million) financial rescue package for the cash-strapped airline announced last month.

The first tranche of NZ$300 million was paid as a loan in October and will be converted with accrued interest into new convertible preference shares at NZ 24 cents per share.

Cullen said the transaction will take place in January subject to shareholder approval at the company’s annual general meeting in December.

The government has also committed itself to provide up to NZ$150 million in further funding before June 2003.

The rescue plan, in which Air New Zealand is to be recapitalized in a two-phase cash injection from the government, was announced Oct. 4.

The carrier’s acting chairman, Jim Farmer, welcomed the share price announcement and said the ”price represents an appropriate level for this major investment, which will recapitalize the company.”

Air New Zealand was sold to a consortium involving Brierley Investments, Qantas Airways, Japan Airlines and American Airlines in 1989 for NZ$660 million.

The government injection means Brierley Investments’ 30% stake shrinks to 5.4% and Singapore Airlines’ 25% stake falls to 4.5%.

The recapitalization package signals Air New Zealand’s return to government control for the first time since 1989.

COPYRIGHT 2001 Kyodo News International, Inc.

COPYRIGHT 2002 Gale Group

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