Air New Zealand is to raise NZ$2.2 billion (US$1.53b) as part of a major capital raise to shore up the airline's balance sheet as it prepares to fly out of the pandemic.
According to Air New Zealand chairwoman Dame Therese Walsh, the capital raise would allow the airline to "survive, revive and thrive".
The recapitalisation package is in three parts:
• A $1.2 billion pro-rata renounceable Rights Offer, giving eligible shareholders an opportunity to buy additional shares at a discount to the prevailing share price. The NZ Government, which holds 51 per cent of the airline, will participate to retain its shareholding. • A $600 million issuance of redeemable shares to the Crown, of which approximately NZ$400 million is intended to refinance through an approximately NZ$600 million debt issue, and • A new $400 million Crown loan to replace the existing loan facility, which can be drawn through to January 2026.
"While there will still be bumpy skies ahead over the next few years, the moment is right for Air New Zealand to raise equity, recapitalise its balance sheet and repay the loan it received from the Crown during the Covid crisis. This is an important step in refuelling for our recovery," Ms Walsh said.
"Our Kia Mau strategy sets a clear flight path for the coming years and while there will always be significant risks for the airline, importantly, our recapitalisation plan will help position us to thrive again", Foran said.
According to the NZ Herald "under the NZ$1.2 billion rights offer, shareholders - which include retail investors through online platform Sharesies - will be offered two new shares for every one share they own in Air New Zealand at an offer price of NZ$0.53 per share."
The rights offer will open Wednesday, April 6 and close on Monday, May 2, 2022.
Air New Zealand's shares last traded at NZ$1.37.
The NZ Herald reports that NZ Finance Minister Grant Robertson said the Government would continue to support the national carrier.
"We are continuing to invest in Air New Zealand and provide stability and certainty as the airline positions itself for recovery and resume services to key international tourism markets and develop new destinations like New York," he said.
"The Crown has pre-committed to participating in the $1.2 billion equity capital raise by purchasing the number of new shares necessary to retain its 51 per cent holding, which is worth up to $602 million. A portion of the capital raised will be used to repay loans it received from the Government during the pandemic.
"It has been an incredibly challenging time for Air New Zealand over the past two years. We have provided significant support to Air New Zealand to recognise its critical role in keeping the country connected to the rest of the world, including the Crown loan facility which has been drawn down by $850 million."
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