Tuesday, April 23, 2024

Auckland Council confirms $833m sale of airport shares

Auckland Council has confirmed the sale (partial sell-down) of Auckland International Airport Limited (AIAL) shares, as signalled in its Annual Budget 2023/2024.

The sale of 7% of its shares, at an average share price of $8.11 per share, has returned $833 million, which it says will be used to reduce council debt.

Auckland Council Chief Executive, Phil Wilson says the move is a positive outcome for Council, residents and ratepayers of Tāmaki Makaurau.

“When faced with an even greater budget gap as a result of three successive years of financial challenges brought about by the pandemic, flood and cyclone recovery, and inflation and interest rate hikes, the Governing Body agreed to sell-down a portion of the council’s shareholding in AIAL,” said Mr Wilson.

“It set council staff firm guidance to achieve the best possible outcome, including offering the mana whenua of Tāmaki Makaurau the opportunity to participate in the sale.

“We are advised that it is the only share sale of its size in New Zealand to be sold at a premium to the market traded price, and a testament to the process initiated by the council and its advisors.

“The result is a significant return that will offset our existing debt profile and lower future interest costs.”

He said Auckland Council’s remaining shareholding of 11.08% provides ongoing exposure to the future growth and value of AIAL.

Auckland Council’s Governing Body made the decision on 9 June to amend Council’s Long-term Plan to enable a partial sell-down of its 18.08% shareholding in AIAL. The formal adoption of the Annual Budget 2023/2024 on 29 June incorporated the AIAL sell-down with proceeds to be applied against debt retirement.

Group Chief Financial Officer, Peter Gudsell says in implementing the sell-down and considering its timing, the Council took into consideration a range of matters to comply with the Governing Body resolution.

“A structured process to manage the sale, which balanced the council’s objectives of maximising the sale value with an appropriate timeframe, was put in place,” he said.

“We also monitored market conditions, including the timing of company, Commerce Commission and macro-economic information releases.“Executing the sale after the release of AIAL’s latest annual results on 24 August also allowed for a fully informed market prior to the council’s sale and ensured we were engaging with the broadest pool of potential buyers.

“We have been advised that the shares were widely distributed to domestic and international wholesale investors and New Zealand retail investors via the broker network,” said Mr Gudsell

Auckland Council was advised by Flagstaff Partners, UBS and Simpson Grierson.Successful completion of the sale process achieving a weighted average sale price of $8.11, realising a 3.8% premium to the last NZX market traded closing price of $7.81 on 31 August 2023.

The sale price is $833 million, net of any fees. Council says broker fees were at the low end of responses received by brokers.

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