Confusion on NZX: Air NZ rights back in a trading halt

Confusion has surrounded Air New Zealand's market price this morning. Photo / 123RF

Air NZ rights are back in a trading halt while the NZX "clarifies the manner in which" it has set up the instrument ­– which trades as AIRRG – and the trading reference price it has calculated as a result.

NZX's product operations team said in an announcement a further trading halt was applied to Air NZ rights at 11.04am this morning and another announcement will be made when trading in AIRRG is scheduled to resume.

One broker told BusinessDesk it appears the stock exchange miscalculated the reference price for both the shares and the rights, ahead of the stock beginning to trade ex-rights this morning.

The NZX may have calculated the reference price as a 1-for-1 right valued at $1.06, rather than a 2-for-1 right valued at 53 cents each. Resulting in an incorrect reference price.

Confusion has surrounded the airline's market price this morning as NZX contradicted the public market price listed on its own website.

Another broker told BusinessDesk the first trade in Air NZ shares was made at 80 cents this morning, and it has since traded higher at up to 83c. However, NZX product operations put the stock in a trading halt and said the reference price on its website was incorrect and should be 77.5c per share and 24.5c per right to buy two shares.

At 80c, Air New Zealand shares are down 31.2 per cent from Friday to just below the theoretical ex-rights price of 81c.

Grant Davies, an investment advisor at Hamilton Hindin Greene, said the confusion hadn't obviously impacted the trading price.

However, he said the real test for the share price will be when the Australian market opens after midday.

Regular shares have been released from their trading halt, but the rights have been returned to a trading halt. The renounceable rights offer is priced at 53c per share. The NZX website said investors traded 850,000 shares, worth $693,000, by 10.40am. Air NZ rights are also open for trading today, but none had been traded at time of writing.

Each share purchased before market close on Friday gives the holder the right to purchase two new shares at the capital raise price of 53c per share. Investors who don't want to buy the shares can instead sell that right on the NZX.

The market showed a buy offer at 25c and sell offer at 72.5c, an abnormally wide spread, which explains why they haven't traded yet. NZX and Air NZ have been approached for comment.

- BusinessDesk