Auckland Airport shares dump blights council sale plan

By DANIEL RIORDAN

Auckland City Council could find selling its $396 million stake in Auckland Airport a tougher proposition after Singapore Changi Airport Enterprises offloaded $107 million of the shares in a surprise move yesterday.

Not only has the council lost a prospective buyer in Changi, but some of the wide range of institutions who bought shares will not be so hungry for more.

The council meets today to consider Sir William Birch's cost-cutting recommendations, which include selling its 108 million airport shares, representing 25.7 per cent of the company.

The new council under Mayor John Banks favours a sale but a final decision may be several months away.

Changi, which owned 30 million shares or 7.1 per cent of the airport, cited strategic reasons for its exit.

The airport investment company, owned by the Singapore Government, sold its shares to mainly international institutions at $3.58 a share, a 6 per cent discount to Monday's closing price of $3.80. ABN Amro Rothschild managed the sale.

Changi made a profit of $20 million, having bought its shares from the North Shore City Council in November 1999 for $87 million, or $2.80 a share.

It said the shareholding no longer fitted with its investment strategy, which is now more focused on European markets. Changi this year took a 50 per cent stake in British airport investment company Alterra Partners to bid for foreign airports.

ABN Amro director John Moore said the investment bank started selling Changi's shares once the Australian Stock Exchange closed on Monday and the sale was completed at 8 am yesterday.

Only a few buyers were notified beforehand, and then only in the hour before the "accelerated bookbuild" began.

The sale price was in the middle of Changi's indicative range. At that price, the deal was heavily oversubscribed, said Mr Moore. Most of the institutions on the share register participated.

Mr Moore was not prepared to estimate how much of the council's stake would be in demand from those investors should it choose to sell.

Changi had been mentioned as a possible buyer for Auckland's stake.

Andrew South, BT Funds Management equity manager and a holder of airport shares, said Changi's sale could make it harder for Auckland to sell its stake.

"These deals are offered around the world to the infrastructure specialists and investors that like this kind of asset. If you fill them up with Changi then come at them again, it's obviously harder to find buyers."

He doubted the sale would change how the market viewed the airport.

"People come and go off the register for their own reasons and we still think it's a good company."

Other investment managers echoed Mr South's views.

But one cautioned that the price of the Changi deal suggested the council's holding might also have to be sold at a discount, and the stock overhang it could soon represent might have been a reason for Changi's exit.

The airport's shares, which had traded as low as $2.85 after the September 11 terrorist attacks, last week matched their all-time high of $3.95, a 28 per cent gain over the past three months while the index returned 12 per cent.

After the Auckland City Council, the biggest shareholder is Manukau City Council, with a 9.6 per cent stake, valued at $148 million.

Airport shares tumbled 14c yesterday to $3.66 on news of the Changi sale and its price.