Auckland Airport’s $126m share offer takes off

Auckland International Airport will fund its Australian expansion through a fully underwritten entitlement offer that should raise $126.4 million.

The 1-for-16 pro rata offer will see shares sell for $1.65, a substantial discount on the current price of $1.92 (NZX:AIA).

It will be fully underwritten by joint lead managers Credit Suisse (Australia) and First NZ Capital Securities.

There will be no rights trading and any entitlements not taken up or attributable to ineligible shareholders will be offered to institutional investors through bookbuilds.

The company said accelerated institutional component of the offer will see it occur over the next three days.

Eligible shareholders will be entitled to subscribe for one new share for every 16 shares held at the close of trading on February 1.

The capital is needed to help fund Auckland Airport’s acquisition of 24.55% of Cairns and Mackay airports in Queensland, Australia for $166.7 million.

Auckland Airport said the offer structure was a first in terms of equity raisings in New Zealand, although it was well accepted and frequently used in Australia.

It said retail shareholders would have the benefit of knowing the outcome of the institutional entitlement offer and institutional bookbuild before needing to decide on whether or not to take up their entitlements, while shareholders will not be required to pay any brokerage or incur other transaction costs in order for their entitlements to be offered under the bookbuilds.

Shareholders who would be unable to sell their entitlement under a traditional rights issue would also get the chance to still receive some value for their entitlement through any premium above the new share application price paid in the bookbuilds.

Falling revenue, flat ebitda, but more passengers

As part of the details released today, Auckland Airport also revealed its total revenue for the last six months of 2009 was down by 0.6% to $NZ 182.9 million.

It attributed the result to a reduction in retail revenue, impacted from the reversion to a dual operator model for the duty free business as requested by the Commerce Commission and the disruption caused by the construction work in the departures area.

Aeronautical revenue for the six months was consistent with the previous year.

Over the period, total passenger volumes rose 2.3 percent when compared to the previous corresponding period to 6.7 million, driven by increases on trans- Tasman routes and growth in domestic travel passenger numbers due to strong competition. 

Total aircraft movements were down 2.9%, reflecting the decreased frequency
of aircraft movements on domestic routes offset by increased frequency of aircraft movements on international routes.

Operating ebitda was flat in the six month period at $NZ138.8 million, just above the $138.7 million seen in 2008.

The airport attributed this to the decreased retail revenues being offset by lower operating costs than during the previous corresponding period.

Auckland Airport is due to report its operating and financial results for the six months ended 31 December at the end of February.

Institutional entitlement offer timeline:
January 27: Trading halt commences and institutional entitlement offer opens
January 28: Institutional entitlement offer closes
January 29: Institutional bookbuild
February 1: Record date for determining entitlements
February 2: Trading halt lifted
February 4: Settlement of offer and institutional bookbuild; new shares allotted and expected to commence trading on the NZSX and ASX

Retail entitlement offer timeline
Feb 1: Record date
Feb 2: Expected despatch of prospectus and entitlement and acceptance forms; retail entitlement offer opens
Feb 18: Retail entitlement offer closes
Feb 22: Retail bookbuild
Feb 25: Settlement of retail entitlement offer and bookbuild; new shares allotted and expected to commence trading on the NZSX and ASX