By Selling Shares, Air New Zealand Hopes to Raise $2.2 Billion

In a NZ$2.2 billion recapitalization proposal, Air New Zealand is offering its shareholders the opportunity to acquire two shares for every one they already own.

Highlights

  • Air New Zealand has launched a recapitalization plan of NZ$2.2 billion (US$1.53 billion) to help it get back on track.
  • The news of the recapitalization plan leaked ahead of the official announcement, causing trading in Air New Zealand shares to be temporarily halted on Wednesday.
  • Existing shareholders will be offered two new shares for every one they possess under the terms of the $1.2 billion rights offer.

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Air New Zealand

Air New Zealand has launched a recapitalization plan of NZ$2.2 billion (US$1.53 billion) to help it get back on track. A pro rata renounceable rights offer of ordinary shares to eligible shareholders to raise NZ$1.2 billion, NZ$600 million in redeemable shares to be granted to the New Zealand Government under such an existing subscription agreement, and a new dedicated unsecured four-year loan of NZ$400 million from the Government are all part of the recapitalisation.

The news of the recapitalisation plan leaked ahead of the official announcement, causing trading in Air New Zealand shares to be temporarily halted on Wednesday on the Australian and New Zealand stock exchanges. Later in the day, Air New Zealand issued a formal statement.

“When COVID struck in early 2020 we took decisive action. Routes were closed, planes parked, and the number of Air New Zealand employees was reduced by almost a third. Almost overnight, passenger numbers halved and flight demand dropped 95%,"Air New Zealand Chair Dame Therese Walsh stated on Wednesday. “With New Zealand's support, and Crown (New Zealand Government) loan funding, we were able to keep the country connected.”

Existing shareholders will be offered two new shares for every one they possess under the terms of the $1.2 billion rights offer. The asking price is NZ$0.53 per share, which is a 61% reduction to Air New Zealand's share price before the trading stoppage on Wednesday. While the government of New Zealand owns 52% of the country's flag airline, many ordinary Kiwis do as well.

Air New Zealand's expected loss for the year ending June 30 was also updated in Wednesday's statement. The airline reported a loss of more than NZ$800 million. That number has since been revised to less than $800 million by Air New Zealand.

Datchanapriya is a journalism and mass communication student from Chennai. Has always been passionate about writing and connecting with people.

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