Auckland International Airport has moved to end speculation about its balance sheet, with a bid to raise $1.2 billion to get it through the disruption of Covid-19.
With New Zealand under strict lockdown for at least another two weeks and a deep recession expected, a number of companies are believed to be considering raising cash as the outlook darkens quickly.
In mid-February, Auckland Airport was predicting a full year profit of at least $260 million, but on Monday it acknowledged it had been granted waivers on its debt covenants, on the condition that it raise capital.
• Covid-19 coronavirus: As credit markets panic, the Government is poised to make a stunning move into lending
• Covid 19 coronavirus: Auckland Airport - The $7b company reluctant to talk about solvency
• Covid-19 coronavirus: Auckland Airport suspends second runway work
• Covid 19 coronavirus: Government talking to airports - Grant Robertson
"The outbreak of Covid-19 has changed travel and trade markets virtually overnight, and like many organisations, our business has been materially impacted," chairman Patrick Strange said.
"Auckland Airport will have a critical role to play in New Zealand's long-term recovery, and we need to act now to secure our future."
Following closely behind the discounted share offer by outdoor clothing retailer Kathmandu last week, Auckland Airport said it would place shares worth $1b in the market.
Shares are being offered to investors at a minimum of $4.50, about an 11 per cent discount to Friday's closing price, and less than half of what they were worth in January.
A $200 million share placement plan will start later this week, in which eligible shareholders will be able to subscribe for up to 50,000 shares.
Auckland Council, which owns almost 22 per cent of the airport, said it only learnt of the proposal on Monday so it was too soon to say if it would participate in the fundraising.
Now you can check if your boss has applied for wage subsidy scheme
Auckland Council investment diluted as investors gobble up Auckland Airport shares
While it has retained a market capitalisation of more than $6b, Auckland Airport, along with Air New Zealand, has been at the forefront of a group of companies most impacted by disruption and restrictions put in place to try to prevent the spread of the global pandemic.
Nevertheless, the airport's long-term prospects meant the market should take up the shares.
Craig Stent, head of equities of Harbour Asset Management, believed there would be significant interest in the placement, both locally and offshore, in particular from infrastructure-focused investors who took a long-term view of assets.
"Businesses like that are going to be around for a long time. You might never see an opportunity like this again, to buy stock at such low levels."
Auckland Airport said the size of the fundraising was aimed to give it sufficient cash to cope "under a range of recovery scenarios".
Craig Investment Partners' head of private client research, Mark Lister, said the airport was wise to raise enough money so that it did not have to come back for more, but was surprised that the airport believed it needed that cash.
"I think it probably does tell us that the impact on international travel and tourism is potentially more significant and takes longer to resolve itself than a lot of people might believe."
The number of companies taking steps to conserve cash is growing, with Kiwi Property, which owns more than $3b in commercial property, saying it would not pay a final dividend.
It follows Z Energy, which on Friday said it was cancelling its final dividend as it talked to its lenders about working capital facilities.
SkyCity is the subject of speculation that it may need to raise cash, after warning on Friday that it was losing $90m in revenue a month during the shutdown.
In late March Forsyth Barr published a report assessing which NZX-listed companies were most exposed to the impacts of Covid-19. As well as Air New Zealand, Auckland Airport and Kathmandu (which have all taken steps to address balance sheet concerns), the group included The Warehouse, Briscoes and Michael Hill International.