IFT - Infratil

[Toddy]

If only!

Council may sell airport stake
08 July 2005
By ROELAND VAN DEN BERGH

Wellington City Council may consider selling its international airport stake as a result of its battle with majority shareholder Infratil over dividend payments, deputy mayor Alick Shaw says.


The issue has come to a head after the council turned down a $5.7 million dividend payment for the year to March 31, its share of the $17.3 million tax paid profit, while it considered an Infratil proposal to swap its shares in the airport for convertible notes.

Convertible notes provide a fixed rate of return, but at a lower yield.

The process should give some indication what the airport was worth, Mr Shaw said.

"It will enable councillors to think about whether or not this amount of capital is properly employed there, or may be better employed in paying for the infrastructural needs of the city."

Based on Infratil's purchase price of $98 million for its 66 per cent holding in 1999, the council's stake would have been worth about $50 million at the time. The council has earned about $20 million in cash on the investment in that time.

"There are issues also in respect of our being able to protect our position into the future, which are not going to be discussed in an open forum," Mr Shaw said.

AdvertisementAdvertisementThe council also missed out on a dividend last year after Infratil decided to invest profits back into the airport, which was planning capital expenditure of about $200 million to develop the international terminal and upgrade the runway.

"I suspect that this debate will have the effect of persuading more to at least think about that possibility" of selling the airport, Mr Shaw said. "I'm not very happy having a truck load of capital tied up in something that doesn't give us a cash flow."

Mr Shaw said he would personally consider a sale, "but there will be substantial opposition to the sale of an asset".

The council has budgeted for a return of $4 million a year from the airport, or about $23 per ratepayer, in its long-term council and community plan that is due for review next year.

Failure to earn a dividend from an investment for two years in a row made it more difficult to include future earnings in forecasts used to set rates.

Total investment income represented between 2.5 per cent and 3 per cent of rates income.

Selling the airport would also significantly reduce the council's borrowings, Mr Shaw said.

Infratil executive Tim Brown said the company would be interested in taking full ownership of the airport if the council decided to sell. Discussions with the council about the structure of its investment in the airport had been on going for a number of years.

"It has been a slow process," Mr Brown said.

Having the council as an investor had benefited Infratil because both investors had the same interests for the airport.

The dividend issue was only a small part of the relationship, Mr Brown said.

[shasta]

Toddy, your thoughts on IFT's full ownership of Wellington Airport?

I previously posted they shouldnt invest in NZ anymore but this is an opportunity to gain full ownership & surely they would jump at it.

A while back i posted this share would hit $3.75, now bring $4.00.

A great bottom draw investment!

Shasta why should IFT own it It should go to tender at least.

[Toddy]

As majority shareholder IFT already makes all of the management decisions regarding Wellington International Airport. That is the main issue the Council has.
The main thing here is that the Council and IFT are talking about it and the future of the airport. If the Council are serious about exiting their holding then they will look at the best way out for them. i.e they will want to obtain the best price for their rate payers. Options may even include floating the airport on the NZX.

IFT has the upper hand on this one and could afford to pay a premium to secure total ownership. If someone else was prepared to pay more than IFT then that would signal to the market that they may want to buy IFT out in the future.
Either way you look at it, its all good for IFT.

[Snow Leopard]

I see Infratil are seeking permission to buy back upto 10% of their shares during the next year.

[duncan macgregor]

United states energy company Alliant energy corp are reviewing their stake in TRUSTPOWER. Infrantile and Alliant energy NZ Ltd werent answering phone calls this morning on the subject. There is a play going on guys pay attention. macdunk

[Futurz]

quote:Originally posted by duncan macgregor

United states energy company Alliant energy corp are reviewing their stake in TRUSTPOWER. Infrantile and Alliant energy NZ Ltd werent answering phone calls this morning on the subject. There is a play going on guys pay attention. macdunk

Looks interesting...

http://quote.bloomberg.com/apps/news...d=aYeDtYR83Ydw

[Toddy]

Sounds like the management down at IFT have been busy talking.

Three possibilities on the go.
10% share buyback.
TPW shareholding restrucutre.
Wellington City Councl talks about the future structure of Wellington International Airport holding.

Anyone of the three above should breed some life into the IFT share price.

[Toddy]

Looks like another airport no-go.

Ryanair May Cancel Planned German Base After Court Decision
July 19 (Bloomberg) -- Ryanair Holdings Plc, Europe's biggest low-cost airline, may cancel a planned new base in the northern German city of Luebeck after a court ruling jeopardized expansion plans at the airport.

The Dublin-based airline said in April it would serve 2 million passengers a year with four new Boeing Co. 737-model aircraft operating from Luebeck, representing an investment of $250 million. The plan was dependent on the completion of a purchase agreement between the city and Wellington, New Zealand- based Infratil Ltd., an airport and infrastructure investor.

The higher administrative court in the state of Schleswig- Holstein decided yesterday to halt the airport's expansion because of improper zoning and lack of consideration for a wildlife sanctuary. Ryanair started to explore alternative sites after it became clear plans to open the base by Oct. 31 couldn't be met, said spokeswoman Caroline Baldwin.

``We're in talks with a number of other European airports,'' she said, declining to name them. ``Those aircraft will be deployed elsewhere.''

Ryanair might still go ahead with the expansion plan for Luebeck if the purchase agreement is completed, she said.

Infratil agreed to buy a 90 percent stake in Luebeck airport from the city for 13 million euros ($15.6 million) and to invest 60 million euros, airport operator Flughafen Luebeck GmbH said in April. The purchase required approval by the city council and depended on court approval of the expansion plan at the airport, which is near Hamburg.

Ryanair aimed to operate routes to the U.K. and mainland Europe from the airport. The carrier also has a hub at Fraport AG's Frankfurt-Hahn Airport and flies out of an airfield near Dusseldorf, Germany.

[Snow Leopard]

I presume some time will be spent trying to get this past the court and if not then Infratil will go looking for other opportunities.
Still it is a bit of a short-term setback.