The man behind the controversial part-sale of Queenstown Airport admits he’s now required to promote flogging more of it.
In a shock revelation, Queenstown Airport Corporation board chairman Mark Taylor says that under the terms of the deal he must “speak to the virtues” of stage two.
Under stage one, Auckland International Airport has snapped up 24.99 per cent of community-owned Queenstown Airport for $27.7 million – but has no power over QAC decisions.
That changes if Auckland gets a green light to proceed with stage two and increase its stake up to 35 per cent.
Auckland would then be able to block major transaction resolutions around the QAC board table.
In comments that’ll stoke existing local outrage at the secretive deal, Taylor reveals: “We’re committed to promote the second phase.”
Asked to elaborate, Taylor says: “It’s not a defined term but obviously it’s to promote it as a transaction worthy of being done.
“Certainly speak to the virtues of it.
“It’s just a requirement to promote it. More importantly, you can’t be negative.”
Queenstown Lakes District Council, the majority owner of Queenstown Airport, ultimately decides whether Auckland can proceed with stage two.
The stage two option expires if it is not taken up by next June.
Mountain Scene put it to Taylor that as it stands, council is in the box seat given QAC has struck a $27.7m deal for no loss of control.
Taylor: “I agree, I understand that.
“[But] the additional capital that QAC would get can still be very productively used and grow the value of the business and grow QLDC’s shareholding and de-risk the business, so we think the trade-off is worth it … for the subsequent loss of total control,” he says.
Under stage two, the council will be paid a special $10m one-off dividend – Auckland also pays a higher price per share and a further $2.2m lump sum to reflect the higher value of a shareholding above 25 per cent.
Taylor faces an increasingly difficult task to sell stage two to the community and council.
Both Air New Zealand and the Queenstown Community Strategic Asset Group – formed to oppose Auckland’s buy-in – have filed separate applications in the High Court querying stage one and trying to block stage two.
Both applications are against the council, QAC and Auckland International Airport.
Air NZ spokesman Mark Street says his company believes a lack of consultation by the council and its decisions on the sale failed to comply with the Local Government Act.
“Air NZ supports the community’s concerns,” Street says.
Taylor says had it not been for the $27.7m raised from Auckland’s share buy-in, the cost of QAC’s planned
2010-11 development pro-gramme would have been more than its existing bank borrowings could handle.
The resort airport company will also be taken from profit into loss by new depreciation rules ann-ounced in the Government’s recent Budget, Taylor warns.
The depreciation changes will mean a $5.8m hit to QAC’s 2009-10 bottom line.
Taylor predicts a loss of around $2m when year-end accounts are finalised.