How Is The APA Bid Going?
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How Is The APA Bid Going?
Just wondering how the APA bid acceptance is at present?
Also, while it may be just me, I have this funy feeling that the APA people might end up down the track thanking their lucky stars if their bid fails.
No obvious reason why....just a feeling. I' ve seen a takeover bid for a major brand once fall over before...and the bidder was eventually very thankful it did.
Also, while it may be just me, I have this funy feeling that the APA people might end up down the track thanking their lucky stars if their bid fails.
No obvious reason why....just a feeling. I' ve seen a takeover bid for a major brand once fall over before...and the bidder was eventually very thankful it did.
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it gets more expensive by the day
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as most of you aware the rules in the take over game has changed. the banks lowered their minimum 90% acceptance level to 70-75% in return for a HIGHER INTEREST RATE. as recently speculated by a financial columnist this would add another 200 MILLION DOLLARS a year in interest.
AND HERE THEY KEEP ON SAYING BUSINESS AS USUAL
as most of you aware the rules in the take over game has changed. the banks lowered their minimum 90% acceptance level to 70-75% in return for a HIGHER INTEREST RATE. as recently speculated by a financial columnist this would add another 200 MILLION DOLLARS a year in interest.
AND HERE THEY KEEP ON SAYING BUSINESS AS USUAL
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The Government and reserve bank are continually talking about credit card debt and the interest payments.Apparently it's ok for groups like APA though....
Well APA's bankcard has just had it's credit limit raised and it will be interesting to see how they will want to recoup that debt and in what time frame...
Well APA's bankcard has just had it's credit limit raised and it will be interesting to see how they will want to recoup that debt and in what time frame...
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It's a goer.
Almost certain to get over the line now I think. Word has it that APA will today announce:
a) An extension to the acceptance date
b) A new acceptance threshold (70 or 75% apparently) at which the bid will go unconditional.
Given that the consortium now has around 30% acceptances, and that the hedge funds are holding around 40% (and will certainly sell) this should remove the last obstacle.
Once the syndicate acquires upwards of 70% and the bid goes unconditional, a number of other funds will probably also sell, as the liquidity in the new entity won't meet their index thresholds.
A final "cleanup" bid to the holdouts (Balanced Equity, UBS etc) can then be made off market at a higher price. This will give them the 90% they need to delist the company and they're away.
What will be interesting is to see the details (if any are released) about what new covenants have been put into the debt package to enable the lower threshold. New security for the lenders over other parts of the airline or its assets is a given - but which parts?
SW
a) An extension to the acceptance date
b) A new acceptance threshold (70 or 75% apparently) at which the bid will go unconditional.
Given that the consortium now has around 30% acceptances, and that the hedge funds are holding around 40% (and will certainly sell) this should remove the last obstacle.
Once the syndicate acquires upwards of 70% and the bid goes unconditional, a number of other funds will probably also sell, as the liquidity in the new entity won't meet their index thresholds.
A final "cleanup" bid to the holdouts (Balanced Equity, UBS etc) can then be made off market at a higher price. This will give them the 90% they need to delist the company and they're away.
What will be interesting is to see the details (if any are released) about what new covenants have been put into the debt package to enable the lower threshold. New security for the lenders over other parts of the airline or its assets is a given - but which parts?
SW
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Looks like it's going to go ahead. Good luck, QANTAS staff. You're going to need it when you're being rogered by a bunch of people who have even less interest in you and the company than the current lot.
Seems there was another airline who recently went through something similar...
Seems there was another airline who recently went through something similar...
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if they get hold of us we are finished as a reputable airline with the advent of workchoices they will slash and burn, us our careers and what was the vehicle that put a little country at the end of the line on the world stage...
Aided and abetted by the liars who profit from selling something they don't own
and it isn't spectator sport it is very sad to those of us directly undermined by this. The multiplier affect will mean many thousands of australians will be worse off. From check in staff to pilots we all have families and aspirations which will amount to nought when this trainsmash happens...
Aided and abetted by the liars who profit from selling something they don't own
and it isn't spectator sport it is very sad to those of us directly undermined by this. The multiplier affect will mean many thousands of australians will be worse off. From check in staff to pilots we all have families and aspirations which will amount to nought when this trainsmash happens...
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WHY?
From the Melbourne Herald-Sun
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.
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.
April 12, 2007 05:40pm
Article from: AAP
Font size: + -
Send this article: Print Email
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.
) 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.
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Even if they found anything, what would they do? Their track record ain't so good when it comes to such matters!
You gotta have teeth to bite...
Like it or not, once given the green light by the federal government, the takeover was/is always going to happen, the terms are merely the finer details.
You gotta have teeth to bite...
Like it or not, once given the green light by the federal government, the takeover was/is always going to happen, the terms are merely the finer details.
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The Great Qantas Heist
So now it all becomes clear......
Some of the financial press today is interesting...
*APA to rip $4bn out of Qantas
THE consortium bidding for Qantas plans to take $4 billion out of the company in the first 12 months after being forced by recalcitrant shareholders to lower its minimum acceptance level to 70 per cent of the national carrier's shares.
APA's revised plans would see Qantas return capital totalling $2.5 billion for the first 12 months after APA gained control and pay out retained earnings of $1.5 billion.
A capital return may require shareholder approval but APA believes it can vote and if that's right the outcome is a fait accompli.
Under the restructured offer, Qantas' debt level will rise "significantly", with APA's intended capital management plan requiring the airline to return $6 billion.
*Qantas chief executive Geoff Dixon and chief financial officer Peter Gregg would be invited to remain on the board.
*As part of its revised bid for the company, APA said it would replace existing external directors with its own nominees and might seek payment for consulting services to Qantas.
"APA would consider making available its expertise and providing assistance to Qantas on all aspects of its strategy under an advisory services arrangement," APA said in its supplementary bidder's statement.
"APA may charge for the services provided under any such arrangement if appropriate. The amount and basis of any such fee has not been formulated at this time and would be subject to discussion with the board of Qantas at the relevant time."
Mr Mansfield said "there would be no taking fees for taking fees' sake" but APA said any such fees would be on arms' length commercial terms.
*..... Qantas to date has paid fully franked dividends, the payment foreshadowed by APA is likely to be "predominantly" unfranked,
*Mr Mansfield said there would "possibily be some changes" to senior management contracts if the company remained public.
But he added that no firm arrangements had been discussed with Qantas executives who would have collectively stood to benefit from the company's privatisation through ownership of APA shares.
As part of the original APA offer, senior Qantas executives were being invited to roll shares accumulated during 10 years since the airline was privatised into a share in APA at the fully paid-up value.
Beyond that, they could access shares in a share bonus scheme.
Executives were to be provided with interest-free purchase loans by APA which would be limited-recourse. Under the original offer they also stood to receive increases in their annual salaries as well as bonuses of up to 200 per cent of the cash component of their base salary from next year.
But if Qantas remained listed, it would have to retain public company-style management incentive schemes.
Anyone else feel like participating in a latter day French style Revolution???
Some of the financial press today is interesting...
*APA to rip $4bn out of Qantas
THE consortium bidding for Qantas plans to take $4 billion out of the company in the first 12 months after being forced by recalcitrant shareholders to lower its minimum acceptance level to 70 per cent of the national carrier's shares.
APA's revised plans would see Qantas return capital totalling $2.5 billion for the first 12 months after APA gained control and pay out retained earnings of $1.5 billion.
A capital return may require shareholder approval but APA believes it can vote and if that's right the outcome is a fait accompli.
Under the restructured offer, Qantas' debt level will rise "significantly", with APA's intended capital management plan requiring the airline to return $6 billion.
*Qantas chief executive Geoff Dixon and chief financial officer Peter Gregg would be invited to remain on the board.
*As part of its revised bid for the company, APA said it would replace existing external directors with its own nominees and might seek payment for consulting services to Qantas.
"APA would consider making available its expertise and providing assistance to Qantas on all aspects of its strategy under an advisory services arrangement," APA said in its supplementary bidder's statement.
"APA may charge for the services provided under any such arrangement if appropriate. The amount and basis of any such fee has not been formulated at this time and would be subject to discussion with the board of Qantas at the relevant time."
Mr Mansfield said "there would be no taking fees for taking fees' sake" but APA said any such fees would be on arms' length commercial terms.
*..... Qantas to date has paid fully franked dividends, the payment foreshadowed by APA is likely to be "predominantly" unfranked,
*Mr Mansfield said there would "possibily be some changes" to senior management contracts if the company remained public.
But he added that no firm arrangements had been discussed with Qantas executives who would have collectively stood to benefit from the company's privatisation through ownership of APA shares.
As part of the original APA offer, senior Qantas executives were being invited to roll shares accumulated during 10 years since the airline was privatised into a share in APA at the fully paid-up value.
Beyond that, they could access shares in a share bonus scheme.
Executives were to be provided with interest-free purchase loans by APA which would be limited-recourse. Under the original offer they also stood to receive increases in their annual salaries as well as bonuses of up to 200 per cent of the cash component of their base salary from next year.
But if Qantas remained listed, it would have to retain public company-style management incentive schemes.
Anyone else feel like participating in a latter day French style Revolution???
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I have said here previously that I don't think the buyout is a good idea - gearing up a company to this level in an industry this volatile is asking for trouble.
Still, in answer to people like QFinsider - mate, I wouldn't be totally doom and gloom just yet.
Consider this - these people are taking on a lot of debt to buy your airline. There must be something about it that tells them it's a really good business.
Whatever they do by way of capital returns, special dividends, sale of rights over aircraft production slots and so on will not be sufficient to pay down (or even necessarily service) that amount of debt.
Financial engineering of itself cannot recoup the premium paid for this company. To do that, they need to rely on continued strong performance and profitability of the core business.
Simply put, that means that they need QANTAS to continue to be a top notch, well run airline on which many people want to fly. That means that if you are anybody who is key to making that happen (whether pilot, CC, dispatcher or engineer) - you are unlikely to be out of work the day after APA takes control.
There might even be an upside - because despite what the unions say there are still plenty of back room cooks and bottle washers at QANTAS who (in my personal experience of having worked there) don't seem to add much value to the enterprise. They sit around in meetings all day and still think that the company is a government / public service enterprise. More efficiency in some of the administrative functions can only be a good thing for the sharp end IMHO.
To continue to make profit in the existing competitive landscape requires both cost control AND revenues. You already have management aggressively chasing the former - so nothing much will change there! Who knows, they might even (god forbid) look at the latter - new routes or products maybe? If there is genuinely to be a medium-term focus (which will only be proved by actions, not promises) then it could even make it possible to take a few more risks on the revenue side - something which short term shareholders on the ASX would be quick to punish.
I know that's a lot of if's there - and I repeat that I don't think the buyout is a good idea - but keep your chins up. The sky will not fall in tomorrow because there are a different set of super funds owning the airline!
SW
Still, in answer to people like QFinsider - mate, I wouldn't be totally doom and gloom just yet.
Consider this - these people are taking on a lot of debt to buy your airline. There must be something about it that tells them it's a really good business.
Whatever they do by way of capital returns, special dividends, sale of rights over aircraft production slots and so on will not be sufficient to pay down (or even necessarily service) that amount of debt.
Financial engineering of itself cannot recoup the premium paid for this company. To do that, they need to rely on continued strong performance and profitability of the core business.
Simply put, that means that they need QANTAS to continue to be a top notch, well run airline on which many people want to fly. That means that if you are anybody who is key to making that happen (whether pilot, CC, dispatcher or engineer) - you are unlikely to be out of work the day after APA takes control.
There might even be an upside - because despite what the unions say there are still plenty of back room cooks and bottle washers at QANTAS who (in my personal experience of having worked there) don't seem to add much value to the enterprise. They sit around in meetings all day and still think that the company is a government / public service enterprise. More efficiency in some of the administrative functions can only be a good thing for the sharp end IMHO.
To continue to make profit in the existing competitive landscape requires both cost control AND revenues. You already have management aggressively chasing the former - so nothing much will change there! Who knows, they might even (god forbid) look at the latter - new routes or products maybe? If there is genuinely to be a medium-term focus (which will only be proved by actions, not promises) then it could even make it possible to take a few more risks on the revenue side - something which short term shareholders on the ASX would be quick to punish.
I know that's a lot of if's there - and I repeat that I don't think the buyout is a good idea - but keep your chins up. The sky will not fall in tomorrow because there are a different set of super funds owning the airline!
SW
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Is this the financial deal of the century? Stick in some money of your own and get the airline to borrow a lot more, so you can buy the shares. The bid proposes that the current $11.1 billion of equity be structured to only $3.5 billion equity and $7.5 billion of debt.
Rip out $4 billion and (a) pay yourself back and (b) make a $500 million cash killing. As well as gathering the very large fees you have charged to put the deal together. As well as collecting the proposed APA consulting fees.
And now you own the airline. For nothing.
Rip out $4 billion and (a) pay yourself back and (b) make a $500 million cash killing. As well as gathering the very large fees you have charged to put the deal together. As well as collecting the proposed APA consulting fees.
And now you own the airline. For nothing.
