Wednesday, January 27, 2010

Auckland Airport Capital Raising a fair call

The announcement today that Auckland International Airport [AIA.NZ] is going to raise NZ$126.4 million from shareholders to pay for two hick town airports in the middle of nowhere in Australia should be no surprise to AIA shareholders.

AIA defends its Australian airport purchase

The airport borrowed heavily to fund the purchase and now shareholders must take the brunt of what I see as a poor decision and bail out AIA directors who apparently have money to burn or risk having their share holding diluted - boy I am going to have to eat dirt if this buy is a success.

Anyway, bad business decisions aside, the structure of the capital raising doesn't look half bad.

Allocations of new shares will be attributed on the basis of one new share for every 16 shares held and no extra shares will be given to institutions or any medium sized shareholder will be scaled down their allocation. Every shareholder big or small will be treated in the same manner and for that management should be handed a bunch of fresh pansies. This approach contrasts the many capital raisings of 2009 which favoured smaller and very large shareholders but largely ignored medium sized players like myself who had no choice but to have their shareholdings diluted because of an inability to get a proportional allocation of new shares.

Incidentally AIA is a small shareholding in the Share Investor Portfolio and at 5000 shares my entitlement will come to 312 shares, of which I will take up in full. At NZ$1.65 per share the cost to me will be just over 500 bucks.

The only gripe that I have (I am only happy when I am moaning) is at $1.65 it is a pretty hefty discount to Tuesday's closing price of $1.92.

The capital raising will be fully subscribed.

Related links

Download the AIA offer prospectus and associated documents here.

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c Share Investor 2010

1 comment:

  1. The presentation is good and quite believable, however I think I would believe it more if they could at least get the punctuation correct on the opening slide where they refer to Cairns and Mackay Airport's ( no apostrophe needed there Simon. )

    We'll see how it pans out and if their spellling improves.


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