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  1. #791
    ? steve fleming's Avatar
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    Quote Originally Posted by macduffy View Post
    Yes, we need to see some numbers to get a better idea of this.
    Here are some numbers/analysis for you MD - from Huntleys
    EPS dilutive but CF positive (given impact of depn)
    -----------------------------------------------------------------------

    -Auckland Airport announced yesterday that it was acquiring a 24.55% stake in North Queensland Airports (NQA) which owns the Cairns and Macay Airports in Queensland. AIA will pay A$133m (NZ$166m) which will be initially funded by debt with longer term funding mix involving a mixture of debt and equity

    -Management does not expect the acquisition to have any material impact on dividend distribution. It however expects to have a dilutive impact on EPS on account of higher funding and depreciation cost.

    -Key investors besides AIA in NQA are JP Morgan (49.9%), Hastings managed infrastructure fund (20.12%) and Perron Investments (5.43%). NQA has a gearing of approximately 43%.

    -IRR of mid-teen percentages is expected from the deal over the long term. The purchase price including assumed debt works out to an EBITDA multiple of 18.8 times FY09 earnings. The purchase price is slightly above the price paid to the Queensland state government late in 2008.

    -The acquisition gives AIA an exposure to the fast growing tourism market in Cairns which is expected to benefit from the rapidly growing Asian market. Great Barrier Reef and West Tropic Rainforests are the main attractions here. Australia has set itself a goal of lifting growth from Asian visitors by 7% p.a. from 2009-2014. This is approximately 2x the growth rate that NZ is hoping to achieve.

    -Cairns Airport roughly makes up 75% of the purchase price. It is the seventh busiest airport in Australia with 680,000 international and 3m domestic passengers. Overall passenger numbers since 2003 have grown at 3.1% p.a. supported by solid growth in domestic passengers. International passenger numbers have declined due to a reduction in Japanese tourists.

    -The Mackay Airport is a domestic airport and represents 25% of the purchase price. Passenger volumes have more than doubled since 2002 to 946,000 in 2009 benefiting from strong resources demand. Bowen Basin, one of the largest coal mining regions of the world is supporting growth.

    -NQA is expected to generate good free cash flows as future capital expenditure requirements are minimal and probably in line with depreciation. NQA’s revenue is 100% unregulated.

    -Management expects synergies stemming from air service development and tourism marketing to lift annual passenger numbers at the Auckland Airport by 100,000 within the next 5 years. This should deliver incremental EBITDA of NZ$2-2.3m p.a.
    Share prices follow earnings....buy EPS growth!!



  2. #792
    Legend peat's Avatar
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    ...rather a lengthy trading halt !

    27 Jan 2010 09:43NZX
    27 January 2010NZX Regulation AnnouncementAuckland International Airport Limited (AIA)Trading Halt of SecuritiesNZX Regulation advises that, following the announcement by AucklandInternational Airport Limited (AIA) today at 9.19am, the trading halt placedon AIA Ordinary Shares will remain in place to enable AIA to complete theinstitutional component of its accelerated renounceable entitlement offer.NZXR expects the trading halt will be lifted at commencement of trading onTuesday, 2 February 2010.ENDSEnd CA:00190552 For:AIA Type:HALT Time:2010-01-27:09:43:23

    and in further news

    Auckland International Airport
    has announced a NZ$126.4m share offer to shareholders to help pay for an almost quarter stake in two Queensland airports bought earlier this month.
    The shares, of which subscribers can apply for one per 16 they already own, will be available fromFebruary 1, at NZ$1.65 each. On January 13, the airport bought a 24.55 percent stake in Cairns and Mackay airports in Queensland. The company had used its existing debt facilities to pay for the purchase, it said. Auckland Airport chairman Tony Frankham said today the company's credit rating and outlook were unaffected by the acquisition.

    Last edited by peat; 27-01-2010 at 10:47 AM.
    For clarity, nothing I say is advice....

  3. #793
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    Rather a niggardly discount IMO, given that the market price is around 192. Still, given that AIA was around 280 a year ago, I spose 165 is not too bad. AIA is my biggest NZX holding so I'll certainly be going for my full quota

  4. #794
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    Yes, it's one of my bigger NZX holdings too but I'm happy for them to raise the capital at the highest possible price. It's not a large issue at 1 for 16 but there may still be some pressure on existing shares and some buying opportunites. I'll look hard at buying there too, given the chance.


  5. #795
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    Fair comment, macduffy. 1 for 16 means minimal dilution which should help to hold up the share price. And there may well be buying opp's when trading resumes.
    Last edited by Lawso; 27-01-2010 at 04:26 PM.

  6. #796
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    Default NZ Herald reports...

    http://www.nzherald.co.nz/nz/news/ar...ectid=10622728
    Ratepayers face $28m bill for Oz airport deal

    By Andrew Koubaridis

    4:00 AM Thursday Jan 28, 2010



    Auckland City Council has a 12.71 per cent holding, while Manukau's is 10.01 per cent. Photo / NZ Herald



    Auckland City and Manukau ratepayers will foot a $28 million bill as their councils move to secure their stakes in Auckland Airport.
    The cities' cash injection is the result of the airport company's announcement yesterday of its plans to issue new shares worth $126 million to help pay for its purchase of a 24.55 per cent stake in Cairns and Mackay airports in Queensland.
    Auckland City Council has a 12.71 per cent holding in the airport at Mangere. Manukau's is 10.01 per cent.
    To maintain those stakes, Auckland City needs to spend $16 million and Manukau $12.66 million buying extra shares.
    Both councils will cease to exist in November when the Super City is formed, but council leaders yesterday said the new investment was necessary to retain ownership of a key asset.
    Manukau Mayor Len Brown said the decision meant his city's shareholding stayed at more than 10 per cent and would not be able to be bought out in any takeover attempt.
    "Failure to take up the offer would, in effect, be selling down of the council's stake," he said. "Our shareholding enables us to continue to have a say in the direction and development of the company ... On pure commercial grounds it is the right decision. The company is a quality asset which returns good dividends."
    Auckland City Mayor John Banks said the airport was a "critically important" piece of infrastructure and would be a significant player in New Zealand's future foreign exchange earnings and inbound tourism.
    Local Government Minister Rodney Hide said the arrival of the Super City would not stop council investment in commercial business ventures.
    But changes to the Local Government Act, planned for this year, would direct them to concentrate on their core functions, "which I think will be a great relief to taxpayers".
    Mr Hide said his opinion of the airport share purchases "doesn't matter", but the spend-up "highlights why we need to be focusing local councils on their core functions, rather than investing in commercial ventures".
    Auckland City finance chairman Doug Armstrong said that after November 1, it would be up to the new Auckland CouTncil to determine future policy on the airport shareholding.

    ____________________________

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    \"Better to remain silent and thought a fool than to speak out and remove all doubt\"

  7. #797
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    Default and more...

    http://www.nzherald.co.nz/business/n...ectid=10622673

    Airport share offer gets tick
    By Adam Bennett

    4:00 AM Thursday Jan 28, 2010






    Auckland International Airport's $126.4 million equity raising announced yesterday has won the thumbs up from the Shareholders Association for the way it allows even those retail investors who don't take part to benefit.
    AIA said the cash raised in the one-for-16 pro rata entitlement offer would be used to repay a portion of the debt drawn down to pay for its $166.7 million acquisition of 24.55 per cent in Cairns and Mackay airports in Queensland which was announced two weeks ago.
    The structure of the offer, which is fully underwritten by joint lead managers Credit Suisse Australia and First NZ Capital, while common in Australia, was a first in the New Zealand market, AIA chief financial officer Simon Robinson said.
    Any entitlements not taken up in the institutional pro rata offer or the subsequent retail offer would be offered to other investors in two separate bookbuilds.
    Any premium over the $1.65 exercise price achieved in the bookbuild would go the original holder of the entitlements.
    "What this means is our joint lead managers will sell those entitlements on behalf of those shareholders," said Robinson.


    The offer benefited Auckland Airport as it expedited the institutional part of the offer and it also helped shareholders who could not participate to capture the value of their entitlements without incurring brokerage charges which might otherwise eat into the value of the entitlements for holders of small stakes.
    The Shareholders Association's Bruce Sheppard was not convinced of the wisdom of the Cairns and Mackay acquisition or the need to issue new equity to fund it, given the company's relatively strong balance sheet.
    However, the structure of the offer was good even for the most unsophisticated retail investor.
    "If you are stupid and you don't exercise your rights you at least get what the market for tradeable rights would have created or more. At the end of that process, all of those who did nothing get a share of the booty. It can't be fairer than that."
    Auckland City Council has a 12.71 per cent stake in the airport and Manukau City Council has 10.01 per cent. Auckland City Council said it will finance the purchase of its entitlement through debt of about $16 million. Manukau said it will cost $12.66 million to maintain its stake. NZ Super fund, which has a 9.75 per cent stake, has not said if it will take up its entitlement.
    Auckland Airport shares closed at $1.92 yesterday.

    __________

    YOTT
    \"Better to remain silent and thought a fool than to speak out and remove all doubt\"

  8. #798
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    I may be missing something, but I fail to see the logic that owning shares in a couple of Aus airports can increase tourist traffic to NZ. If the holding was in a tour company or an airline, it may be a slightly different matter, but in an airport?

  9. #799
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    I think the theory is that they may be able to encourage more of the overseas tourists to North Queensland to include NZ as a "round trip" destination. Possibly by offering incentives to more airlines to fly Cairns to Auckland?

    Bit of a long bow, I must agree. The real rationale might be that AIA is an efficient airport operator and sees a business oppportunity in NQ. Helps to sell the idea to everyone if dressed up as also being in the national interest.



    Disc: Holding AIA and will buy more on any weakness.
    Last edited by macduffy; 28-01-2010 at 10:33 AM.

  10. #800
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    Quote Originally Posted by rainey View Post
    I may be missing something, but I fail to see the logic that owning shares in a couple of Aus airports can increase tourist traffic to NZ. If the holding was in a tour company or an airline, it may be a slightly different matter, but in an airport?
    I agree
    A bit more NZ advertising in the terminials is about all.

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