Auckland Airport shares resume trading after Auckland mayor's 'blooper' at council meeting

Thursday, 15 December 2022

Auckland International Airport shares were halted from trading after comments by Auckland mayor Wayne Brown, which were later refuted by the company.

Auckland International Airport shares have resumed trading after being halted following speculative comments from Auckland mayor Wayne Brown that the company was planning a major capital raising to fund a new domestic terminal.

The NZX-listed shares were halted for about an hour from 11.59am on Thursday pending an announcement from the company. Major announcements by a public company can influence the value of its shares and must be released through the sharemarket so all market participants have access to information at the same time.

In a statement to the NZX at 12.56pm, Auckland Airport refuted the mayor’s claims.

“Auckland Airport has no plans to carry out an equity raise and we have made no announcements to the market in this regard,” the company said. “Auckland Airport is planning to fund the new domestic terminal with borrowings.”

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Crucial council meeting overshadowed by Mayor Wayne Brown spilling Auckland airport details.

The council’s 18% holding in Auckland Airport is a hot topic for councillors because the newly elected mayor wants to sell the stake to help plug a forecast $295 million budget deficit for the 2023/24 year.

Brown told councillors at the meeting, which was live blogged by Stuff, that the airport’s capital raising could dilute the council's holding to 10-11%.

Councillor Chris Darby interjected and asked whether the airport company had announced that.

Brown paused for a minute, and then conceded it had not been.

Following the comments, a spokesperson for Brown said the mayor was not in possession of any information not available to the market.

Like everyone in the investment community, the mayor was speculating about how the airport company might finance its ambitious capital expenditure programme, the spokesperson said.

That included $160 million in upgrades to roading and a new transit system, a $1 billion-plus new domestic hub, $200m for a transport hub, $75m for ongoing upgrades to the existing domestic terminal, expanded international airfield and taxiway capacity, a new cargo precinct, a new international arrivals area and a second runway.

“The mayor’s point is that these are all good news for Auckland, but if the airport decides it needs to raise capital for any of them, this would require the council to either to participate in the capital raise with ratepayers’ or borrowed money, or see its shareholding fall below the current 18%,” the spokesperson said. “The mayor is not in possession of any information not available to the market.”

Harbour Asset Management director Shane Solly noted that while the airport had not announced a capital raise to fund development, it had been talked about by several stockbroking analysts in published reports and would not come as a surprise to investors if announced.

Still, he said it would be dependent on pricing consultation with airlines, known as PSE4, which had yet to conclude.

In its statement to the market, Auckland Airport (AIA) said it was consulting with airlines about its future infrastructure programme.

Airport chief executive Carrie Hurihanganui has previously said the company was in talks with airlines about the design of the planned new purpose-built domestic terminal to be merged into the eastern end of the existing international terminal, which was approved by the company’s board in August last year.

She said airlines would face higher charges for the new $1 billion-plus combined terminal, but said it would be delivered in stages in line with aviation’s recovery, and the new fees would not start until the building was commissioned.

NZ RegCo, which is responsible for monitoring and enforcing compliance with NZX’s market rules, would not be taking further action in relation to Brown’s comments, said chief executive Joost van Amelsfort.

“NZ RegCo has discretion under the listing rules to apply a trading halt if it considers that confidentiality may have been lost in material information that might otherwise be subject to an exception from immediate disclosure, or if NZ RegCo considers a halt to be appropriate to enable an issuer to prepare and release information necessary to prevent the development of a false market in an issuer's shares,” he said.

“NZ RegCo considers the release of AIA's statement appropriately addresses the concerns initially held arising from mayor Brown’s reported comments at the council meeting earlier today.”

Shares in Auckland Airport were up 0.3% at $8.11 in mid-afternoon trading on the NZX. Prior to the trading halt, the shares were down 0.4%.

- With additional reporting by Todd Niall