The Queenstown Chamber of Commerce board last night issued a recommendation the Queenstown Lakes District Council investigate whether there had been a breach of Queenstown Airport Corporation's responsibilities under its Statement of Intent.
It also recommended the QLDC and QAC take no further action to increase Auckland International Airport Ltd's (AIAL) shareholding; provide a position on the QAC board to AIAL; or enter into any shareholder agreement with AIAL.
The recommendations were attached to a seven-page memorandum sent out to the chamber's 270 members, examining the deal between QAC and AIAL, which had the latter buy a 24.99% new shareholding from QAC for $27.7 million.
Among the information circulated last night was Mayor Clive Geddes had been advised by QAC chairman Mark Taylor "three months ago" of the board's plan to seek to raise new equity capital for QAC and QAC undertook a "desktop research exercise" to find its preferred investor.
The chamber said only AIAL was approached - the reason given by QAC was it was necessary to "maintain confidentiality".
Another reason given was AIAL was "not interested in investing in QAC if the community was going to be consulted".
"Given the sale of the shares in AIAL by its various Auckland Regional Council shareholders was highly controversial and widely opposed by many ratepayers and businesses, it is not surprising that if AIAL wanted to secure a strategic shareholding in QAC it would oppose consultation," the memorandum said.
"Whether QAC should have agreed to `no consultation' is a point on which members may wish to express a view to the Chamber."
The Chamber board also had concerns with QAC reporting - the chief executive's report in the most recent annual report said: `The airport is aware of its strategic place in the community and that communication and planning is key to our success".
The memorandum said the QAC's most recent Statement of Intent (SOI) made no mention of the proposal to sell shares in the airport.
"Standard procedure" was any departure from the SOI was expected to be the subject of further consultation between QAC and the QLDC before any further action was taken, it said.
When the councillors were informed of the deal at an "urgent, short-notice meeting" on July 7, they were given "only one perspective - a positive one" and made to give an immediate response.
"Unless they had specific business corporate expertise, it would have been extremely difficult for councillors to assess the deal, especially at short notice."
Further, it said Air New Zealand - "a long term supporter of QAC and Queenstown" - was told when the deal had been done.
The Chamber had concerns landing fees had the potential to be increased as a result of the share issue and the deal effectively "sidelines Air New Zealand in favour of AIAL".
The memorandum said analysis of QAC accounts and information showed the corporation was in a "sound financial position, had sufficient credit lines ... and sufficient earnings to pay its interest".
The new equity proposal was "one option" to fund capital development and the Chamber board could not see "there was any need for urgency" to raise new capital and, accordingly, there was time for consultation.
Cash dividends were normally paid out of profits, so to pay cash dividends QAC would have to be "more focused on making profits", the memorandum said.
The board questioned why an alliance could not be achieved "without a shareholding" and why one of the purposes of the alliance was to collaborate on "destination marketing".
"Queenstown's destination marketing is undertaken by DQ, which is largely funded by Queenstown businesses.
QAC board chairman Mark Taylor did not wish to comment until he had read the information.
Mayor Clive Geddes could not be reached for comment last night.
Chamber of Commerce issues over the QAC and AIAL deal
Issue 1
• Queenstown Airport was 100% owned by the Queenstown community. The council bought out the Government's share about 20 years ago.
• The QAC board is appointed by the Queenstown Lakes District Council. Until recently it had a councillor as a director, or in recent years the mayor and/or chief executive attended board meetings
Issue 2
• QAC chairman Mark Taylor advised Mayor Clive Geddes three months ago of QAC plans to seek to raise new equity capital for QAC.
• Following QAC advice to the mayor the board was undertaking a search for new equity, QAC undertook a "desktop research exercise" as to who was its preferred investor.
• Auckland International Airport Ltd (AIAL) was identified and only it was approached. The reason given by QAC to the chamber board was this was necessary to maintain confidentiality.
Issue 3
• QAC advised the chamber board a further reason for confidentiality was AIAL was not interested in investing in QAC if the community was going to be consulted.
Issue 4
• The mayor, some councillors and senior council staff were required to sign confidentiality agreements about 10 days before the deal was announced. These people were then told more details about the deal.
• All available councillors invited to a short-notice urgent meeting on July 7 when the deal was announced to them. Two councillors were absent, three indicated they had concerns or disagreed with deal.
Issue 5
• Air New Zealand was advised 24.99% shareholding was issued to AIAL on the morning of July 8.
Issue 6
• QAC was in a sound financial position before issuing 24.99% shareholding to AIAL.
Issue 7
• There is no evidence of a council requirement for QAC to raise capital or to pay dividends to the council.
