From the Melbourne Herald-Sun
Qantas deal ready to fly
April 12, 2007 05:40pm
Article from: AAP
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THE consortium behind the $11.1b Qantas bid has struck a key deal to win shareholder backing for the deal.
A consortium bidding for Qantas today announced it had restructured its offer to ensure its success, after some institutional buyers bought strategic stakes that threatened their plans.
Airline Partners Australia said that after talking to its financiers it had decided to lower its minimum shareholder acceptance condition to 70 per cent, from 90 per cent.
It also extended the closing date of the $5.45 cash per share offer by 14 days to May 4.
This means that if holders of 70 per cent of the issued capital of Qantas accept the offer it will succeed.
APA director Bob Mansfield said it was time for Qantas shareholders to make a decision on the bid.
"APA is concerned that many Qantas shareholders have become discouraged from accepting the offer in the belief that the opposition to the offer from a small number of vocal shareholders may prevent us reaching the 90 per cent acceptance condition," APA director Bob Mansfield said.
"By effectively lowering that condition to 70 per cent, shareholders can be confident that the offer will be successful."
The decision to lower the threshold follows weeks of uncertainty after Qantas four per cent stakeholder Balanced Equity Management said it would reject the offer.
That declaration, combined with expectations that UBS Global Asset Management might use its stake to also reject the bid, led to concerns APA would be unable to fulfil its 90 per cent acceptance condition, delist Qantas and take full ownership.
Under the changes announced today, Qantas could remain listed although APA said it remained keen to acquire all of its shares.
APA currently has acceptances representing 30 per cent.
Mr Mansfield said he did not know what UBS intended to do in relation to its Qantas holding.
"UBS hasn't indicated anything to us," he told journalists.
"The negatives I have outlined ... will worry some shareholders and they will move away frome the register."
He noted that if APA does acquire 70 per cent of Qantas it would be removed from major indices, making the stock less attractive to fund managers.
Mr Mansfield today also warned shareholders that Qantas was facing a number of "serious competitive threats" from the expansion plans other airlines such as Virgin Blue, Emirates and Etihad.
"Some of these threats were factored into APA's offer when announced. They are now real," he said.
"APA firmly believes that in the current environment of increasing competition, the APA offer continues to represent an attractive offer to the remaining Qantas shareholders who have not yet accepted."
Qantas has already said it would expand its aircraft flee to increase its domestic capacity by 14 per cent and spend $13 billion on new aircraft in the next few years.
APA said its financiers had agreed to provide it with a new funding facility, that can be activated if it receives acceptances for more than 70 per cent of Qantas, but less than 90 per cent.
Mr Mansfield also reiterated the total offer of $5.60 per share, after including a special 15 cents dividend paid by Qantas, was a full one.
The transaction has been described as fair and reasonable by an independent expert and has achieved the necessary regulatory clearances.
"Qantas shares have never traded at or above our offer price," Mr Mansfield said.
Qantas shares ended today up eight cents at $5.39.
Led by Macquarie Bank Ltd, APA also comprises Allco Finance Group Ltd and Allco Equity Partners Ltd of Australia, US private equity giant Texas Pacific Group and Canada's Onex Group.
Note particularly Mansfield's (
) quote in bold. He really is a first class bully
If Qantas is such a poor investement as suggested by this big mouth, accompanied by reputed threats left, right and centre, why are these people so keen to get hold of it?
There is something about this whole deal that has the smell of rotting fish.
I wonder when or if someone will blow his whistle. Also judging by Qantas loads I have recently experienced and the level of the fares fares I have paid, I believe that another profit statement may be appropriate.
