After months of debate and consulting, Auckland Council finally sold a chunk of shares in Auckland Airport overnight.
The council today confirmed the partial sell-down of Auckland International Airport Limited (AIAL) shares, as signalled in its budget.
The sale of shares, at an average share price of $8.11 per share, returned $835.9 million, which the council said would be used to reduce debt.
The deal means Auckland Council now has a remaining shareholding of 11.08 per cent.
Auckland Council chief executive Phil Wilson said it was a good outcome for the council, and for residents and ratepayers.
“When faced with an even greater budget gap as a result of three successive years of financial challenges brought about by the pandemic, flood and cyclone recovery, and inflation and interest rate hikes, the governing body agreed to sell down a portion of the council’s shareholding in AIAL,” Wilson said.
The share sale was confirmed in an Auckland Council statement at 8.30am and on the NZX website soon after.
A shareholder notice released on NZX this morning revealed the price fetched for the 7 per cent sell down was $835.9 million.
It showed the council sold a $535 million parcel of shares in a block trade agreement underwritten by UBS New Zealand on Thursday.
The 66 million shares were sold for $8.10 each.
Another 11.1 million shares were sold on the market for $8.15 a share, fetching $90.9m, and another parcel of 25.8 million shares were sold for $8.11 each, worth $209.96m.
In total, Auckland Council sold down its stake from a diluted 18.08 per cent to 11.08 per cent.
Auckland Council voted in June to sell 7 per cent of Auckland Airport, reducing its stake to 11.1 per cent.
The council initially proposed to sell its full 18.1 per cent stake in the airport as part of the mayor’s plan to reduce its debt and limit rate rises.
It was predicted the council could get a windfall of $865 million towards repaying debt.
Ultimately the deal ended with the council getting $29m less than was forecast when it decided to sell.
Yesterday, Auckland Council entered into the block trade agreement with UBS.
Under the deal, the council appointed UBS to manage and underwrite the sale of 66,053,498 shares.
The price was $8.10 per share.
Deputy mayor Desley Simpsons today acknowledged the airport share sale had been a contentious issue.
“So it was important to give Aucklanders confidence the sale gave the benefit expected,” Simpson said.
“The sale represents a healthy premium on the most recently traded share price. Our advisors have compared it to other transactions over $500m in Australia and New Zealand equity capital markets in the last five to six years.
“They consider this the highest ever figure achieved in terms of sale price versus closing price (30 cents or nearly 4 per cent).
Simpson added: ”The sale now gives us debt headroom in challenging financial times to deliver more for Aucklanders. I am very pleased at the outcome.”
Albany Ward councillor John Watson said the council did not get a very good deal, and it was now likely the next step would be to sell all remaining airport shares.
“As far as the price goes, $8.11 is actually quite a bit off the 12-month high of $8.98 a share, which would have realised $926 million, or even the $8.88 around the time the decision was made,” Watson said today.
“They’re slapping each other on the back saying what a great deal they got ... the sale isn’t as good as they’re representing it.”
Watson said “suits” and consultants and hangers-on were making money from the deal.
“So I don’t know if I’d be popping the corks at the sale of nearly half of Auckland ratepayers’ historically highest yielding investment.”
The sale has been controversial since it was put forward by mayor Wayne Brown in his first budget.
Previously, the council and Brown voted 14 votes to 6 with one abstention to approve all of the mayor’s first budget, which kicked off last year with savage cuts to community services, the arts and across the council group.
Melbourne-based Flagstaff Partners is pocketing a secret fee of NZ$1.425 million to provide advice to the council on the sale process and analysis to ensure it goes ahead efficiently, cost-effectively and successfully.
At the time of the sales, Brown was overseas with a trade delegation in India.
The business delegation is representing some 40 organisations including Fonterra, Zespri, QualityNZ and the Meat Industry Association.
Auckland Chamber of Commerce chief executive Simon Bridges is also on that delegation.