KEY POINTS:
Canada's Federal pension fund is soothing the way for a cornerstone stake in Auckland Airport by dangling the carrot of a governance role for city council owners frustrated by being denied board representation until now.
Although the mayors of Auckland and Manukau cities insisted yesterday that their councils'
combined 22.8 per cent ownership remained out of bounds, Canada Pension Plan will meet the airport company today to outline a pitch to shareholders for up to 49 per cent of the operation.
The fund announced to the Stock Exchange yesterday that it would offer three options, one of which would be for $3.70 a share in cash.
It said the other two would involve combinations of cash and new securities to a value of up to $3.90 a share.
That would be a substantial hike from a purchase price of $3.10 which the fund indicated to both councils in May when sounding out chances of buying their shares, and comparable to Dubai Aerospace Enterprise's now withdrawn offer of $3.80 in cash and securities for a majority stake in the airport.
Although the Canadians have little or no chance of buying shares from the two cities, they are still likely to need their approval for any scheme of arrangement to restructure the company.
Auckland City has voted to hold on to its entire 12.75 per cent shareholding - potentially worth $607 million at the top end of the new indicative offer from Canada - and Manukau Mayor Sir Barry Curtis has reiterated his city's strong opposition to any sale.
But both he and Auckland City Mayor Dick Hubbard are enthusiastic about the possibility that their councils would be offered representation on a restructured board.
"Obviously we are not in the market to sell - but we have to protect and look after our shareholding and not just park and leave it," Mr Hubbard said.
"Certainly Auckland and Manukau have an interest in having some say on the board - at the moment we are largely locked out of that process and the airport board has largely ignored us."
Mr Hubbard said the presence of a cornerstone shareholder now lacking in the airport company may serve to enhance the worth of the city's shareholding.
Sir Barry said his council was opposed to any proposal allowing any shareholder a controlling interest of more than 30 per cent to 35 per cent, and would require board representation before agreeing to any major restructuring.
That reflected his own opposition "to the sale of a controlling interest in a vital piece of infrastructure - notably the gateway to New Zealand".
Although the Canadians have not disclosed their minimum acceptable shareholding in the airport, they are prohibited by the fund's constitution from gaining more than 30 per cent of board seats in any business venture.