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Air NZ sell-down underway - English

The government has today started the process to sell 20 per cent of Air New Zealand shares, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

The airline - privatised by Labour in 1989 but majority owned by the Crown since a 2001 bailout in the wake of its failed Ansett venture - has requested a trading halt from the NZX and ASX.

The Crown is selling 20 percent of Air New Zealand [NZX: AIR] , worth $363 million at Friday's price, via a bookbuild to institutions and brokers, reducing the Crown's holding to 53 percent and beating a referendum on asset sales.

The 2001 bailout saw the government pay $885 million ($1.25 billion in today's dollars) for 80% of the airline.

Craigs Investment Partners, Deutsche Bank and Goldman Sachs have been hired for the selldown, which will start tomorrow and be completed by Tuesday evening, according to a statement from Finance Minister Bill English and State-Owned Enterprises Minister Tony Ryall.

Air NZ shares last traded on Friday at $1.65 and have climbed 27 percent this year. The stock will be halted from trading on the NZX and ASX tomorrow pending the sale and resume trading on Wednesday.

"An off-market sell down is fast and efficient, which is important when working with a company that is already listed," English said.

"Air New Zealand's share price has recently been trading at five-year highs and the NZX is up by around 25 percent over the past 12 months, so it is an opportune time to sell down the Crown's shareholding to maximize proceeds for the benefit of New Zealand taxpayers," the ministers said in a Q+A that accompanied their media release.

The sale is being done in the same week a Citizens Initiated Referendum kicks off asking the question

"Do you support the government selling up to 49% of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand?" Voting in the referendum starts on Nov. 22 and runs through until Dec. 13.

English and Ryall cited other selldowns of listed companies on the NZX in the past 12 months as examples of the success of an off-market sale process. Auckland International Airport, Trade Me Group, Summerset Group and Sky Network Television also saw the departure or reduction of the holding of a major shareholder.

While the Air New Zealand stake the government has earmarked for sale had a market value $363 million as at Friday, the four other selldowns cited all went at discounts to the last trading price.

Proceeds from the sale are to go to the government's Future Investment Fund, adding to the $3.6 billion raised from initial public offerings in Mighty River Power and Meridian Energy.

With reporting by BusinessDesk.

Comments and questions

Key & co pushing ahead despite the majority of New Zealanders being against the sales!

NZ already voted for Nationals policies in the last election where Asset sales were a key part of that mandate. Now Labour and Greens are wasting $10mil on a program NZ already voted on #pointless

False logic to say each vote for National was in support of the asset sale programme. Some people voted for them for other reasons... and then remember they didn't collect the majority of all votes either.

The vast majority of people voted for national who stated that asset sales were a key part of there election proposal.
We need to be reducing debt.
A good result

I can see why you're a builder. You haven't been paying attention. Proceeds from these sales are not being used to pay down debt.

Not paying down debt directly, but holding it down by limiting further borrowing for new assets. It's getting a little tiring to hear the likes of Russell Norman constantly harping on about asset sales. Opponents must surely realise the govt. was elected to run the economy. This major factor in their budgets was well publicised prior to this govt. being elected, and restated plainly before being re-elected. Anyone signing that petition was quite irresponsible/ It's a pointless waste of time and money.

Bollocks the vast majority of people did not vote for National at the last elections
Only 74% of registered voters actually voted and 47.3% of those who voted - voted for National

Not sure whether you got past 5th form maths but that is only 35% of kiwi's who voted for National and its policies. Even if you have the argument that they got the majority of those who voted you are still incorrect

So National doesn't have the mandate for specific asset sales
That is why they are quickly selling Air NZ before the referendum - if they were confident they had the mandate they would not be in such a rush.

National won, Labour lost, eat that! What part of National's mandate did you not understand when it came to selling assets..?? Too bad about those who didn't vote. If you don't think that is democracy in action, then perhaps you should lobby for compulsory voting?

Completely false. The majority of voters in the last 2 elections voted for parties who opposed asset sales.

Interesting trend not to use a prospectus - that should be a worry for all regulators - and therefore clearly this sell-down will have to focus on Eligible Investors as defined in the Securities Act, (not the Mums and Dad's as previously indicated by the Government).

One has to think the FMA should take a good hard look at the subscribers, the documentation they have completed, and furthermore should follow any who sell their shares within a reasonable period. I hope the Crowns Solicitors have considered whether the Crown is aiding the avoidance of issuing a prospectus in issuing securities which may get sold to the public shortly thereafter. It seems to be setting an interesting precedent and opens fascinating legal arguments.

(I predict legal action and regulator panic on this trend of avoiding propsectuses which after Geop, and others, is clearly the new issuance trend and which is clearly a one fingered salute to the regulators).

No prospectus is needed as the company is already listed and freely traded. No new shares are being issued, a current shareholder is simply selling some of their shares. Continuous disclosure requirements already being met by Air NZ provide any information required by retail investors.

Least surprising news of the year. Pity Cullen didn't sell down the government's stake when they were over $3.

Never a chance under the previous Socialists. They only buy worthless asserts eg NZ Rail and lumber us all with further debt plus a chance to give their mates a directorship or 2.

Check your history book. It was Labour who privatised Air New Zealand in 1989.

That was then. Now we have a new breed of hard-left big state nutjobs to deal with. Of course the New Zealand government should own an airline. but they should call it Aeroflot.

Aeroflot has newer aircraft, makes more money, and has EXPANDED as a business. By contrast, Air NZ managers have pursued a strategy of non expansion, cost cutting, all the while paying each other unjustifiable bonuses. Here's hoping the government gets rid of its entire shareholding and lets consumers decide just what Air NZ is really worth.

The Russian government funnily enough has a lower 51% share in Aeroflot as opposed to NZ's 53% after this current asset sale. I voted for National and have no issue with the strategic changes in the Government asset ownership from power and airline assets to school and other core infrastructure assets. The retention of majority ownership is a happy compromise for me.

Our primary school aged daughter who is in a class that is nearing 30 because of the lack of class rooms seems a higher priority than funding new 787's and power station turbines that the markets are far more interested in doing.

It was never privatised, Labour subscribed for NEW shares to rescue it !

Great work Mr English. I like to see a decisive politician making the most of a buoyant market!

Decisive. But stupid.
(Literally) No one believes selling the SoEs s driven by sound economic reasoning. It is dogma all the way.
lets rephrase that;
"Nice one Bill, but dumb"

Government cynicism - get all the sales through before the referendum, which they will ignore anyway. Shame Labour isn't a more credible opposition.

I don't necessarily agree with the partial sales, but there's nothing cynical about it. National made it a corner stone policy at the last election. Asset sales was one of the only major policy differences between National and Greens/Labour. Voters made their choice.

Ah, but the lefties dont accept what the voters chose, and ever since have been relitigating the election. They dont accept democracy when it doesnt go their way.

Of course it's cynical. They expect the referendum will say the majority of New Zealanders are against the privatisations so they are doing it anyway. Political two fingers to democracy and the people.

Have no issues with the latest sell off as I personally don't believe in government owning businesses and intervention. Asset sales was the mandate when I voted for National at alst election.

Clearly the National-led Government expects to lose the next election, which is why they are rushing through unpopular policies before they leave office. The announced retirements of so many of their members from Parliament, including able younger members, suggests that they are hunkering down for a long stint in opposition.

Huh, recent polls and historical trends don't back your view on Nationals expectation. No, its simply a Government executing policies it presented to the country before the last election.

Unlike Labour and the Greens who said nothing about their intention to sabotage the partial sale process and in doing so stole $100s of millions of funds from the NZ public.

Finally KG, you have a warped view of people deciding to leave a successful political party, some, perhaps a few of them have not been able to stand up to John Keys demanding standards and have decided to let others come and refresh the lineup. No problem with this at all, being an MP should not be a free ride, there is work to be done and standards to be maintained or raised. If you can;t stand the heat get out of the kitchen.

JK's got demanding standards all right. He' supported by those of the highest order - Peter "Done" and John "i'll just Bank this".

You can always spin the policies and departures positively, but when a motivated, able younger MP like Chris Tremain finds a reason to get out, the writing has to be on the wall for National.

Get off KG, he has 3 teenage kids and wants to be around while he has the chance. Ever brought three teenagers up, they need about as much support as any parent can give. Good on him for making that decision. I would have thought your socialist tendency would applaud someone seeking to ensure the youth under their stewardship are given the best start possible. What reverse spin will you put on this?

A very plausible and respectable reason for leaving. Good on him for getting out with his credibility intact.

As opposed to the old warhorses in the Labour party that cant be prised away from the only well paid job they will ever have.

And Nat MPs can always go back into business and suck on the generous 'corporate welfare' that this government provides.

Perhaps someone should start questioning why Goldman Sachs got appointed on this trade. They have no prior experience in block trades in New Zealand....

If recent history is anything to go by, NZ politicians seem to be developing a penchant for setting up their next job while they're in office.

Now the sale has gone ahead, I would like to see the government incentivise another major competitor into the domestic market, to benefit NZ consumers who get ripped off the domestic monopoly.

I am against the asset sales mooted so far EXCEPT Air NZ.
The govt has no business owning any shares in this company.
Time to let them stand against the competition.

More and more of NZ is for sale on the NZX and being snapped up by foreign funds. Factor that with 50,000 Kiwis leaving NZ each year who are being replaced with immigrants, and in 10 years big parts of NZ won't be in the hands of locals. A bit sad and dire really for the retirement village aka NZ.

Govts selling things normally means they know a bit more than us and want out while the goings good and before what they know kicks in.Good getting the dough in but dont expect a quick earn as an investor.The comforting thing is no Govt will let AirNZ fail at days end so there is an unspoken guarantee in effect and thats a tradeoff for low yield and low growth.

You couldn't have put it better. Whatever price the Gvt gets for it, you can deduct the cost of repurchasing it at some point in the future. What a bloody fiasco.

Airlines are poor investment, their financial performance has an almost cyclic pattern, AirNZ was nearly bankrupt a few years ago so I am not against selling 20%, what bothers me is the haste of this sale and the involvement of Goldman Sachs which may mean price per share could be compromised

Note how mighty river and meridian shares have dropped lately. Can't these so called investors see a dog.

I note Meridian has it's puffy ad campaign up again on bus shelters around Auckland. Are they trying to talk their price up?

What this means is that, demonstrably, we don't have a democracy. Successive governments have shown they couldn't care less about what New Zealanders themselves want. Utter arrogance.

Contrast Switzerland, where the Swiss people themselves are respectfully referred to by their government as "sovereign".

And spare us the sheer nonsense that the government knows best...

California has this policy of citizen referendums but they make it binding. It has put the state on verge of bankruptcy. Governments needed to be guided to a degree by such referendums, the reality of this one is that it was politically motivated by the Greens party and minority opposition party who have not provided any credible economic alternative other than to borrow and tax more sending NZ back into recession.

Too right.
The Green Party and the Labour Party they cozy up to is an unholy union.

So Casssandra, are you for or against MMP?

Bill English is astoundingly good at proclaiming that black is white. Just hope that someone's putting aside a little something to pay for the bailout in 10 years time. The argument won't be economic (just as it wasn't last time). It will be patriotic: we need an airline, cough it up, taxpayer.

The fact that Air NZ is currently overvalued is not a good reason for the Government to sell it, least of all to its own citizens. Because the argument for owning it in the first place was never really about money, but other utilities: we can't rely on other carriers to continue servicing our distant routes.

Govt. sells 20% holding in AirNZ. The sky is falling, the sky is falling. We are all doomed! So says Chicken Cunlittle!

Interesting to note that a brokerage has a neutral outlook on it at 1.52. Advising clients without saying as much not to buy them. First Mark Lister and now FNZC which i find highly unusual by NZ standards.

Wasn't it Labour that baled it out last time when it had been privatised earlier. So much for private ownership. Don't these right wing nut jobs look at history.

Alan, they should have let it go broke - someone else would have bought the assets. Why does the govt need to own an airline you left wing nut job?

Food is more important they flying, so why doesn't the govt own supermarkets? Or is that the next Labour policy? Kiwimart!