Wirraway
5th Oct 2004, 16:45
Wed "Sydney Morning Herald"
Singapore bales out of Air NZ
By Scott Rochfort
October 6, 2004
Air New Zealand was left with the New Zealand Government as its only substantial shareholder after Singapore Airlines sold its remaining 6.3 per cent stake in the Kiwi carrier for $NZ61.7 million ($57 million).
Reminiscent of the sale of British Airways' remaining stake in Qantas last month, Singapore Air yesterday said the sale was part of its new strategy to "monetise non-core holdings".
The stake was sold through an accelerated book-build underwritten by UBS, which was oversubscribed. A range of mainly NZ institutional investors paid $NZ1.63 a share for the stake, a 3 per cent discount to Air NZ's previous closing price of $NZ1.68 a share.
In the week preceding the sale, Air NZ shares fell 6.6 per cent to $NZ1.68 on the NZ Stock Exchange before being placed in a trading halt yesterday morning.
With confidence in Air NZ sapped by rising oil prices and intense trans-Tasman competition, the airline's shares hit a 2-year low of $1.55 on the Australian Stock Exchange before the halt.
The sale ended Singapore Air's costly four-year venture into Australasia, where it was heavily bruised by the collapse of Ansett and near-collapse of Air NZ.
Singapore Air's original 25 per cent investment in Air NZ was diluted to 6.3 per cent in 2001 when the NZ Government had to bail out the airline with an $NZ885 million rescue package which left it with a 72 per cent stake
Following the recapitalisation, the Asian carrier wrote down the value of its Air NZ stake by $S267 million ($222 million).
In January, BIL International, formerly known as Brierley Investments, ended its 15-year association with Air NZ by selling its remaining 7.8 per cent stake.
Singapore Air said the sale had nothing to do with the recent sale of BA's stake in Qantas, or Qantas abandoning its proposed alliance with Air NZ.
Air NZ spokesman Glen Sowry said: "It's not altogether unexpected; [the sale] has been anticipated for some time."
Mr Sowry said the sale of Singapore's stake was positive, given it would make Air NZ a more liquid stock and hence more appealing to fund managers.
Analysts said the sale reflected Singapore Air focusing its expansion efforts in Asia, which by most predictions is on the verge of a boom in air traffic.
"[New Zealand] is a small, geographically remote country and the industry in the region is incredibly competitive," one analyst said.
Citigroup Smith Barney transport analyst Jason Smith said the abandonment of Qantas's proposed alliance with Air NZ last month was the cue for Singapore to sell its remaining stake.
"Singapore was waiting for the alliance to get the yea or nay," he said.
Mr Smith also said the recent talk of a potential marriage between Qantas and Singapore Air had been overblown.
Despite both airlines investigating the possibility of co-operating in the maintenance of their yet to be delivered A380 fleets, Mr Smith said: "You don't need an alliance to do that."
He said the Australian Competition and Consumer Commission would have a hard time approving such an alliance a year after rejecting the planned tie-up between Qantas and Air NZ.
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Singapore bales out of Air NZ
By Scott Rochfort
October 6, 2004
Air New Zealand was left with the New Zealand Government as its only substantial shareholder after Singapore Airlines sold its remaining 6.3 per cent stake in the Kiwi carrier for $NZ61.7 million ($57 million).
Reminiscent of the sale of British Airways' remaining stake in Qantas last month, Singapore Air yesterday said the sale was part of its new strategy to "monetise non-core holdings".
The stake was sold through an accelerated book-build underwritten by UBS, which was oversubscribed. A range of mainly NZ institutional investors paid $NZ1.63 a share for the stake, a 3 per cent discount to Air NZ's previous closing price of $NZ1.68 a share.
In the week preceding the sale, Air NZ shares fell 6.6 per cent to $NZ1.68 on the NZ Stock Exchange before being placed in a trading halt yesterday morning.
With confidence in Air NZ sapped by rising oil prices and intense trans-Tasman competition, the airline's shares hit a 2-year low of $1.55 on the Australian Stock Exchange before the halt.
The sale ended Singapore Air's costly four-year venture into Australasia, where it was heavily bruised by the collapse of Ansett and near-collapse of Air NZ.
Singapore Air's original 25 per cent investment in Air NZ was diluted to 6.3 per cent in 2001 when the NZ Government had to bail out the airline with an $NZ885 million rescue package which left it with a 72 per cent stake
Following the recapitalisation, the Asian carrier wrote down the value of its Air NZ stake by $S267 million ($222 million).
In January, BIL International, formerly known as Brierley Investments, ended its 15-year association with Air NZ by selling its remaining 7.8 per cent stake.
Singapore Air said the sale had nothing to do with the recent sale of BA's stake in Qantas, or Qantas abandoning its proposed alliance with Air NZ.
Air NZ spokesman Glen Sowry said: "It's not altogether unexpected; [the sale] has been anticipated for some time."
Mr Sowry said the sale of Singapore's stake was positive, given it would make Air NZ a more liquid stock and hence more appealing to fund managers.
Analysts said the sale reflected Singapore Air focusing its expansion efforts in Asia, which by most predictions is on the verge of a boom in air traffic.
"[New Zealand] is a small, geographically remote country and the industry in the region is incredibly competitive," one analyst said.
Citigroup Smith Barney transport analyst Jason Smith said the abandonment of Qantas's proposed alliance with Air NZ last month was the cue for Singapore to sell its remaining stake.
"Singapore was waiting for the alliance to get the yea or nay," he said.
Mr Smith also said the recent talk of a potential marriage between Qantas and Singapore Air had been overblown.
Despite both airlines investigating the possibility of co-operating in the maintenance of their yet to be delivered A380 fleets, Mr Smith said: "You don't need an alliance to do that."
He said the Australian Competition and Consumer Commission would have a hard time approving such an alliance a year after rejecting the planned tie-up between Qantas and Air NZ.
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