Investors gird loins for battle

The NZSA buys in to Air NZ as leverage for a rights issue demand, writes ELLEN READ.

The New Zealand Shareholders' Association has made its first foray into the stock market, buying shares in troubled Air New Zealand.

Association chairman Bruce Sheppard confirmed that a minimum parcel of shares had been bought - a move which enables the association to put business to the company's annual meeting.

"We are not a shareholder or sharetrader per se, we are simply buying shares so we can attend public meetings in our own right," Mr Sheppard said.

More purchases would follow, as and when the association felt the need to take issue with a company.

"We are not going to buy minimum parcels in every public company but if you are actually trying to raise business [at a company meeting] you have to be a shareholder," he said.

Following the share purchase, the NZSA has put forward two resolutions for discussion at Air New Zealand's annual meeting later this year.

"The guts of that is that we want the company to do a renounceable rights issue to all shareholders to give shareholders the first lick at putting money in, on a discounted basis, obviously," Mr Sheppard said.

The proposal is for 50c a share on the As and 65c a share on the Bs on a one-for-two basis.

"If shareholders don't take them up they go into the pool for the directors to do with them as they see fit, but you don't get the right to take up more and you don't get the right to transfer them," he said.

"The rationale behind that is that we want shareholders to have the first lick at putting the money in to maintain their proportionality, but after that we believe the company has to have sufficient flexibility by way of unallocated stock if that is what transpires, to actually go out and fix its problems subject to the Government's consent."

Aside from the share purchase, in its first three months of life the NZSA, which now boasts 180 members, has launched a website, and is ready to establish its first branch outside Auckland - in Tauranga.

The NZSA website contains, among other things, information about what the NZSA is and does, its rules, facilities to join online, guidelines statements and copies of correspondence with companies.

It is designed as an educational tool for members as well as a guide for corporates wanting to get a feel for the NZSA's views, Mr Sheppard said. An investment guide section is also being developed.

NZ Shareholders Association