Wednesday, November 21, 2007

Auckland Airports new directors must focus on shareholders

After yesterday's vote at Auckland International Airport [AIA.NZ] AGM a number of the original board was gone and replaced by a motley crew of local politicians, individuals with axes sharpened and ready to grind and a couple of incumbents only just scraping in.

The amount of mud slinging by the current elected directors aimed at each other in the media recently could well leave one thinking that turbulence in the board room will be de rigeur.

Individual agendas are likely to be the order of the day, with newly elected Lloyd Morrison the person with the most to gain. Through his company Infratil [IFT.NZ] and a partnership with the NZ Super Fund, Morrison owns around 9% of AIA. He also owns a majority stake in Wellington Airport and is behind the proposal to build a second airport in Auckland.

Morrison's conflict of interest is clear but his agenda isn't. He made a bid for the Airport earlier this year at a share price of less than what Dubai Aerospace was prepared to pay but said in the meeting yesterday that NZ companies had been "undersold in the past".

Auckland businessman Richard Didsbury, a director nominated and acting on behalf of Auckland City Council and John Brabazon, nominated by Manukau City Council but now stood down, are two individuals with political direction with Didsbury acting on behalf of his council to keep the airport in "New Zealand hands", whatever that means because it is currently a publicly owned company with shareholders living in many countries and Brabazon still possibly imbued with Manukau's don't sell at any price strategy.

Chairman John Maasland is going to have a difficult job getting anyone to agree on a single defined direction for the company as it goes forward because they all seem to have their own ideas as to where the company should go. Ego has raised its ugly head in the lead up to the directorship elections yesterday but it has no place in the board room.

What these individuals seem to have forgotten is that there are shareholders out there who haven't had decent representation over the last 6 months or so during a possible sale of the company. The 2 offers that were turned down outright by the board, Dubai Aerospace and the original Canada Pension Plan scenario should have been put to shareholders and then put to the vote.

Instead directors fell to local and national political interference and public opinion when the property rights of AIA shareholders should have been given preference for it is they who own the company.

The new board need to keep this uppermost in their minds every board meeting and business dinner and lunch that they have.

Disclosure: I own AIA shares

Auckland International Airport @ Share Investor

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Mergers, Acquisitions, and Corporate Restructurings

Mergers, Acquisitions, and Corporate Restructurings by Patrick A. Gaughan
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c Share Investor 2007

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