The government continues to support Air New Zealand as the aviation market stabilizes and the world moves towards more normal border operations.
The Crown Loan Facility, which became available to New Zealand Airlines in March 2020, is a debt facility of up to $ 1.5 billion (additional $ 600 million) available until August 27, 2023 (additional 16 months). Has been extended to. Interest rates are adjusted to reflect current market conditions.
Air New Zealand has also decided to postpone the planned capital raising until September 30, 2021. This gives you more time to assess market conditions. As mentioned earlier, the King wants to remain a majority shareholder and will participate in the salary increase subject to the approval of the Cabinet’s terms.
Finance Minister Grant Robertson said the amendment to the loan facility would allow Air New Zealand to benefit from increased activity as borders reopen and travel and trade movements increase.
“Crown’s role as a majority shareholder was a major source of stability for state-owned airlines during very difficult times.
“As a result, our state-owned airlines are in a much stronger position than many airlines around the world. They support economic development, provide access to international markets, and with the launch of the Transtusman bubble. We need state-owned airlines to enable the international tourism we are starting to see, so we need to maintain that strength.
“We also need a state-owned airline that provides a domestic network that allows people to go where they want to go and get goods where they need it, across New Zealand,” said Grant Robertson.
The Crown Standby Loan Facility, agreed in March 2020, was a measure that provided Air New Zealand with time to relocate its operations and facilitate the implementation of an optimal long-term capital structure. The amended loan agreement retains this expectation and provisions for the conversion of the loan into shares at the request of the King. Air New Zealand’s intent is that all unpaid amounts under the facility will be repaid from the proceeds of the proposed financing.
Contact: Lindsey Birnie 021 814 025
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Debt financing agreements were provided and negotiated on the arm’s length principle, with each party receiving independent advice. The original facility consisted of two tranches, a $ 600 million tranche A and a $ 300 million tranche B. Tranche A will increase by $ 400 million ($ 1 billion) and Tranche B will increase by $ 200 million ($ 500 million).
The existing effective interest rate of the facility is currently 7% to 8% for Tranche A and about 9% per year for Tranche B. The new interest rate structure is an all-in-margin of 350 basis points (including the 100 basis point line). Tranche A has a fee and a 250 basis point margin), and Tranche B has an all-in-margin of 500 basis points (composed of a 100 basis point line fee and a 400 basis point margin). This gives a total interest rate of about 3.80% (using a reference base rate of about 0.3% for tranche A) and 5.30% for tranche B (using the same reference base rate of about 0.3%).
The agreement also includes a 1% step-up of the Tranche A and Tranche B all-in-margins from October 29, 2021. This is similar to existing facilities, but the timing of step-ups has been adjusted to reflect the new ones. Proposed timing of financing. Another feature that is retained is that if tranche B is utilized, tranche A will have the same interest margin as tranche B. These features provide Air New Zealand with an incentive to minimize facility use by looking for other ways to reduce cash. Spending.
A loan agreement is a commercial loan that is expected to be repaid when Air New Zealand raises funds, so it does not affect the government’s operating position or net debt.
When the Trans Tasman bubble opens, the government will support Air New Zealand |
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