Air NZ Shares Drop After Issue

Air New Zealand’s shares fell 12c yesterday after 44.2 million convertible notes issued to Qantas in 2002 were converted to shares, giving the Australian airline a 4.2 per cent stake in the national carrier.

The private equity consortium bidding for Qantas Airways is expected to sell the 4.2% stake in Air New Zealand worth about $A2.1 million ($NZ2.4m) that Qantas acquired yesterday after the two airlines spiked plans to co- operate on trans-Tasman services.

“If the takeover goes ahead, it’s one of the things they’d divest,” BBY analyst Fabian Babich said in Australia.

The Air New Zealand shares closed at $2.05, down from their $2.19 record high earlier in the week.

The notes were redeemable for $98m cash or shares at an issue price of $2.23 each. At yesterday’s price they were worth about $90m.

The notes were issued in 2002 when the airlines were trying to form a strategic alliance which was rejected by the Commerce Commission as too anti-competitive.

The airlines yesterday formally terminated the strategic alliance agreement.

Expert says sell B5

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