KEY POINTS:
Infratil chief Lloyd Morrison yesterday spoke for the first time on his ideal ownership structure for Auckland Airport, why he wants to be on the board and why he is opposing the bid by Canada Pension Plan Investment Board for a 40 per cent stake.
Morrison says Infratil
and the NZ Superannuation Fund - which jointly hold a stake of nearly 8 per cent - have no intention of leading a rival bid for control of the airport.
"It's just far too a big a situation. We don't have a mandate to manage that sort of money for them and for Infratil it's certainly way too big an interest."
But he holds a strong view on how the ownership of the airport should be structured.
"There is room for a cornerstone shareholder but one that is not a controlling shareholder."
That shareholder should not hold more than a stake of 30 per cent, he argues. Any more than that represents a controlling stake.
"We've never been against the Canadians. The question to ask them is why do they have to have 40 per cent. Why don't they drop that to 25 per cent?"
If a controlling stake in the airport is to be sold, it should be contested and ought to be worth a lot more than the $3.6555 currently on the table, Morrison says.
"Any deal which delivers control of the airport to a buyer ought to be worth more than $4."
If he is elected to the board at the AGM on November 20, Morrison will lobby for a new process which actively seeks a minority cornerstone shareholder.
"In terms of a process we think it makes sense to try and introduce a party that can add some value in the first instance."
The Canadians could well be a participant on that basis, he says.
Critics of the Infratil view have argued for some time that starting the process again is unnecessary. At least 10 parties - including Infratil - have already held talks with the board since Dubai Aerospace put the airport in play back in May.
Those parties have had ample opportunity to put forward their bids in a contested process, Infratil critics argue. There simply isn't anyone out there prepared to offer a better price.
Morrison strongly disagrees and maintains there have been serious flaws in the way the board has handled the process.
The idea that the process has been fair and open to all is inconsistent with what the Canadians were saying at the time of the Dubai bid, he says.
"The feedback we've had from a number of parties - who had exhibited an interest - was that they never felt they could properly compete for the asset. I know that there are other parties who we think could be significant contributors that weren't even approached."
He's not yet prepared to name those potential investors but seems sure that they will emerge.
"Why would I have that confidence? Because I believe the asset is an incredibly good one. I think it's a fantastic entry point to the eastern seaboard of Australia and it's second only to Sydney as an entry point in this part of the world. "
Macquarie Airports last month took a minority 20 per cent stake in an airport in Japan - could it be a contender at Auckland?
"If they were interested in a minority stake then it would be good if they exhibited that interest," Morrison says.
There has been a lot of speculation about Infratil's patriotic stance on the asset ownership. Critics are quick to highlight its ownership of the three airports in Europe.
"It really annoys me when people say we're against foreign investment. What we're about is New Zealand being successful," he says. "Any New Zealander that thinks we're going to be successful without New Zealand corporates being sustainably successful is an ostrich - they've got their head in the sand. Of course we need foreign investment and we have it in spades."
Infratil's European airports were bought in contested sale processes, he says. "When we bought Kent Airport we had to go through an auction run by the receivers . We won it by paying the highest price, but in an auction run by the receivers."
Morrison says he hopes shareholders will judge him on his track record on November 20.
That record includes a rare example of a local company buying back the family silver when Infratil paid $250 million to buy the Stagecoach bus and ferry company from its British owners.
Last year Infratil bought another asset from a foreign investor, paying $465 million for the 23.8 per cent stake in Tauranga-based lines company TrustPower held by US energy investor Alliant. That took its stake to 50.5 per cent.
A controlling stake but one that was taken with support of the board and shareholders, says Morrison.
In the end, what does the airport mean for Infratil?
"Well we've got $300 million invested - and its not Infratil, its Infratil and NZ Super. Our job is to make that work. We're not in here for charity, we're in here for a decent return. If control goes for $3.66 and we're forced to sell - because we wouldn't want to be a minority where control goes on that basis - then I don't think we've got value for money."
Infratil's assets
* TrustPower (50.5 per cent stake)
* Infratil Energy Australia
* Energy Developments (25.6 per cent)
* Wellington Airport
* Infratil Airports Europe
* NZ Bus
