Queenstown Airport may have been at the mercy of bankers without the help of Auckland white knights.
The revelation is in council-owned Queenstown Airport Corporation’s report on its June 30 year, adding to the controversy over QAC’s shock sell-off of 24.99 per cent to Auckland International Airport for $27.7 million.
At year end, QAC was technically in breach of covenants with BNZ and Westpac on loans of $35.7m, the report says.
Those covenants demand a minimum ratio of shareholders funds to total tangible assets. The breach arose from the Government’s May announcement scrapping tax depreciation deductions on buildings, QAC’s annual report says.
Airport chairman Mark Taylor reports this triggered extra tax of $6.25m, putting the company into loss and slashing equity – creating the banking breach.
“The company’s bankers were fully briefed on the potential breach stemming from the tax policy change and subsequently waived the breach,” QAC’s annual report says.
Taylor: “Since balance date, the new [$27.7m] capital raised has corrected this position.”
Auckland paid on July 8, a week after QAC’s year end.
“The company has repaid $26.7m of bank debt subsequent to year end,” the report records.
Taylor admits QAC could “potentially” have renegotiated the banking covenant without Auckland’s injection.
The QAC chairman says the Government depreciation announcement turned what would have been a much-improved $3.3m profit into an after-tax loss of $3.7m. In mid-August, before QAC accounts were finalised, Taylor predicted a loss of “around $2m”.
Underlying results from Queenstown Airport strengthened, however, mainly from a $2m lift in revenue to $13.3m.
Of this extra $2m, just under $1m came from extra landing fees, $339,000 from departure taxes and $600,000 from rental income.
An accounting policy change triggered by growth has also forced QAC to revalue property, plant and equipment.
They’ve soared from $59m to $134m – almost all from a $70m hike in land.