By DANIEL RIORDAN
Air New Zealand, reeling from its rights issue debacle but still desperate for capital, looks likely to hold off on its $150 million capital notes issue until next year, as it awaits a credit rerating from Standard and Poor's.
The airline has not specified when it will launch its issue to the market - it has shareholder approval for an issue any time before next May - but it had been widely expected to launch soon after its $284 million rights issue, taking advantage of any market momentum.
That momentum has been in the wrong direction, however, following a savage last-minute profit downgrade, which shocked the market and prompted investigations from the stock exchange and the Securities Commission.
The airline said yesterday that its rights issue had closed last Friday with a shortfall of 12.8 million shares or $19.2 million.
That shortfall will be borne by underwriter JB Were and nine sub-underwriters, including major shareholders Brierley Investments and Singapore Airlines.
The shortfall represented 6.8 per cent of the 189 million shares available in the one-for-three renounceable issue - 1.6 per cent of the B shares and 11.8 per cent of the A shares. Excluding the 57 million A shares taken up by Brierley Investments, the A shares shortfall of 11.4 million was 41 per cent of the A shares offered.
Air New Zealand spokesman Cameron Hill said the airline had given no indication of the timing for its notes issue and was not prepared to do so now.
"We will put out a notification when we're ready," said Mr Hill.
Although airline executives are understood to remain confident Standard and Poor's will not dock its present BBB- rating, airlines watchers are less sure in light of last week's profit downgrades.
Standard and Poor's downgraded the airline in February and put it on negative credit watch after it announced it was buying all of Ansett Australia.
The ratings agency said while the deal would strengthen Air NZ's Australasian business, it would increase its debt-to-equity ratio. That ratio had soared to 82.3 per cent by balance date of June 30.
The proceeds of the rights issue and the capital notes raising will be used to pay for the June purchase of the half of Ansett Australia that Air New Zealand did not already own, reducing the debt-equity ratio.
The S&P rating, due this month, will affect the interest rate Air NZ offers on its capital notes. A downgrade would force the airline to offer a higher interest rate to offset the higher risk for note buyers.
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