A haggle over seats on Queenstown Airport Corporation’s board looms if Auckland Airport is offered more shares in QAC.
Despite shelling out $27 million for 24.99 per cent early this month, Auckland has no board representation in this controversial deal so far – and virtually no say in how the airport is run.
With 75.1 per cent, Queenstown Lakes District Council-appointed directors can do pretty much what they like at QAC.
If QLDC takes up its option of selling further shares – lifting Auckland’s stake to between 30-35 per cent – the northern airport will want directorships on QAC’s board.
The number of board seats would be thrashed out as part of a wide-ranging shareholders’ agreement, QAC chairman Mark Taylor says.
One seat’s been spoken of but that’s up to QLDC to finalise with Auckland, he adds.
Negotiating a shareholders’ agreement would be crucial because, as Taylor says, such agreements supercede standard provisions in the Companies Act.
“A shareholders’ agreement allows you to do whatever you want.”
As well as board seats, shareholder agreements cover major matters such as raising capital, settling disputes, selling stakes to each other – and possibly granting Auckland a greater say than the Companies Act allows.
Also on the table when negotiating Auckland’s second bite of shares would be the $10m special dividend dangled as a carrot in front of cash-strapped QLDC.
Special dividends normally go to all shareholders so Auckland would in effect get a partial refund of its $10m – but the northerners have agreed to waive that right, Taylor says, though he can’t spell out the procedure.
“We haven’t actually [looked] in depth as to how that would be structured.”
Nor does he know whether – as for the earlier 24.99 per cent – QAC’s board would issue Auckland with additional new shares or whether QLDC might simply sell existing shares. The documentation currently calls for another share issue, Taylor says – “because that was the simplest way, rather than trying to second-guess how it might actually happen”.
The decision’s open and Auckland may have a view on it, he says.
Taylor isn’t worried about several weighty matters still up in the air.
“There would be no agreement to phase two unless both parties agree on a shareholder agreement.
“The actual mechanism has yet to be worked out because we don’t know if it will happen at all – and if it does happen, at what level.”
If a second share deal takes shape, that’s when the lawyers and tax accountants will work out how best to do it, Taylor says.