Auckland Airport announces capital return

28 November 2013

Auckland Airport has announced today that it intends to seek shareholder and court approval to return $454 million of capital to its shareholders.

Sir Henry van der Heyden, Auckland Airport’s Chair, says the company is focused on being fast, efficient and effective as part of its five-year business strategy, Faster, Higher, Stronger.

“To be efficient, we need to effectively manage our operating costs, our capital expenditure and have an efficient mixture of equity and debt. In order to achieve this the Board of Directors has proposed to return capital to our shareholders,” says Sir Henry.

“The Company’s strong performance over the past five years, including our successful property development and retail businesses and our investments in other airports, means we currently have a less efficient mix of equity and debt than we had in the past.”

“By returning capital to our shareholders we can improve our balance of equity and debt, returning to levels achieved in 2011.”

“Auckland Airport is committed to providing critical airport infrastructure for New Zealand and is currently investing in an important upgrade to the domestic terminal as well as planning to deliver our 30-year vision of the ‘airport of the future’. The Company remains well placed to deliver on these developments even with the return of capital.”

“We value the funding flexibility provided by a stable A- credit rating and the capital return should help us retain such flexibility. This is important if we are to continue to invest in future growth opportunities for the benefit of our customers, the city and New Zealand.”

“Auckland Airport will seek court and shareholder approval to cancel 1 in 10 of its shares. The amount each shareholder will receive per share cancelled will be $3.43, approximately equal to the closing share price of Auckland Airport shares immediately prior to this announcement.”

“It is important that every shareholder understands that the return of capital will not alter their proportionate shareholding in the company or their proportionate voting and distribution rights.”

“A portion of the capital returned to shareholders will be treated as a dividend for tax purposes and will receive imputation credits at the company tax rate of 28%. The Company will not be paying an interim dividend to shareholders for the 2014 financial year.”

The capital return will be implemented by way of a scheme of arrangement to be approved by shareholders at a special meeting and by the High Court under Part XV of the Companies Act 1993.

“With the approval of the Court and our shareholders we hope to have completed the return of capital mid-April 2014.”

More information is available online at: http://www.aucklandairport.co.nz/Corporate/Investors

Ends

Key facts about the capital return:

  • $454 million total cash payment to shareholders to take place in mid-April 2014.
  • Cancellation of 1 in 10 shares, with a payment of $3.43 for each share cancelled.
    Capital return to take place by way of a High Court approved scheme of arrangement with shareholder approval being sought in February 2014. If approved by 75% or more of voting shareholders, final High Court approval is expected in March 2014.
  • 40% of payment as a capital return for tax purposes, with the remaining 60% treated as a taxable dividend which will be fully imputed at a 28% tax rate.
  • The capital return will not alter shareholders’ proportionate shareholding in the Company or future voting and distribution rights.
  • Auckland Airport continues to target a stable A- long term corporate credit rating from Standard & Poor’s.

Example of impact on shareholder:

Before After
Shares held 10,000 9,000
Share price on close of business before announcement $3.43
Assumed share price after the capital return $3.43
Value of shares $34,300 $30,870
Capital return cash payment to shareholders[1] - $3,430
Value of shares and capital return[1] $34,300[2] $34,300[3]
Percentage ownership 0.000756% 0.000756%

[1] Subject to applicable withholding taxes
[2] Shares only
[3] Cash (before tax) and shares

For further information please contact:

Media -
Simon Lambourne
+64 9 255 9089
simon.lambourne@aucklandairport.co.nz

Investors –
Campbell De Morgan
+64 9 255 9029
campbell.demorgan@aucklandairport.co.nz