KEY POINTS:
A move by Infratil's Lloyd Morrison to seek a seat on the Auckland International Airport board is being interpreted by the market as a bid to derail the sale proposal put forward by the Canada Pension Plan Investment Board.
Morrison is one of three candidates who yesterday put
their hats in the ring for a board seat at the company's annual general meeting on November 20.
Auckland City Council has nominated Richard Didsbury to represent its 12.75 per cent and Manukau has put forward John Brabazon to represent its 10 per cent stake.
Infratil - in partnership with New Zealand Superannuation Fund - holds a 6.2 per cent stake.
Auckland Airport shares dropped as much as 7c yesterday before bouncing back to close just 3c down at $3.02. That's well short of the CPPIB cash offer of$3.70, reflecting market scepticism that the bid will succeed.
Morrison is expected to agitate against the CPPIB bid if he is successful in gaining a board seat.
There has been wide-ranging speculation about Infratil's motives - first for taking a pivotal stake in the airport - and now for seeking a board seat.
One scenario is that Morrison and Infratil would like the current sale process scrapped and begun again.
That suggests they believe there may be other bidders out there prepared to pay a higher price than CPPIB who have been scared off by the political vagaries of the council involvement.
The CPPIB has presented the board with three options for acquiring a minority stake in Auckland International Airport.
They included an all-cash option of $3.70 a share, the CPPIB board said yesterday.
The other two involved a mix of cash and shares in a new airport company which would be structured to "provide enhanced returns while preserving the investment grade rating".
The second two options would provide value up to $3.90 a share - 10c a share more than the value of the failed offer by Dubai Aerospace (DAE).
CPPIB seems to have done a better job than DAE of meeting council expectations around any ownership change. It is seeking only a minority stake and has indicated it is comfortable with the councils having directors on the board.
With the councils now having stated their bottom-line positions, a fresh sale process might draw out new bidders, one source said yesterday.
But a contrary view is that the airport has been in play since at least May and there are few, if any, potential bidders who have not already assessed its value.
It seems unlikely that the CPPIB proposal will be ready to go to a shareholder vote at the AGM.
But it is understood that the Canadians remain committed to their proposal.
They have a team on the ground in Auckland and have been meeting the airport board and key stakeholders, including both councils.
One of the big unanswered questions is the extent to which Infratil itself may be a potential buyer - most likely as part of a consortium.
Morrison - who is understood to be overseas - did not return calls yesterday.
In his statement to the exchange, he said: "Any proposal, whether from one of the parties now identified as interested in a shareholding in AIA or someone new, will be treated on its merits. Infratil's own position on foreign ownership of New Zealand assets is clear. It is better for New Zealanders to own New Zealand assets unless the foreign shareholder is bringing either capital which is otherwise not available or expertise/added value."
Manukau City candidate Brabazon has worked in capital markets for more than 20 years, eight at Brierley Investments and seven with Banque Indosuez and Bancorp New Zealand.
Didsbury was a founding shareholder of Kiwi Income Property Trust and a director of its management company.
Infratil and New Zealand Superannuation Fund in August revealed a 6.2 per cent stake in Auckland International Airport. NZ Super Fund holds 2.87 plus 1.19 per cent under mandates with other fund managers and Morrison & Co and Infratil hold 2.14 per cent.
COLLISION COURSE
* Auckland Airport's annual meeting on November 20 is looming as the date for a showdown over the make-up of the board of directors.
* Major shareholders Infratil and Auckland and Manukau city councils are seeking seats on the board.
* Changes to the board could potentially derail a sale process being led by the Canada Pension Plan Investment Board - which is seeking a 40 per cent stake.
-Additional reporting NZPA
