The Overseas Investment Office granted Auckland International Airport Ltd (AIAL) permission to acquire rights or an interest up to 49.9% in Queenstown Airport, through the issue of new shares by Queenstown Airport Corporation (QAC), in a decision dated May 28, 2010, applied for by AIAL in "late April".
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However, AIAL corporate relations manager Richard Llewellyn said the company had no intention of increasing its shareholding to that extent.
The decision said QAC owned or controlled a freehold interest in 23.3650ha of land at 64 Grant Rd, Frankton and a freehold interest in 131.1358ha of land at Lucas Pl, Frankton.
Queenstown Airport was the fifth largest airport in New Zealand in terms of passenger numbers, while AIAL owned and operated New Zealand's largest and busiest airport in terms of passenger numbers and revenue.
On July 8, 2010 AIAL acquired an "initial" 24.99% shareholding of the increased capital in QAC by subscribing for about 4 million new shares at a price of $6.91 per share, for a total consideration of $27.7 million, it said.
QAC could exercise an option for AIAL to increase its shareholding to between 30% and 35% at any time up until June 30, 2011.
"The price for the additional shares will be $7.47 per share, plus a lump sum consideration of $2.2 million, reflecting the additional value of a shareholding over 25%."
QAC may also exercise an option which would allow AIAL to subscribe for "further shares" in QAC, which would "together with the initial issue of shares, comprise up to 49.9% of the shares in QAC," it said.
Because 22.9% of AIAL is owned by "various overseas people", the company had to get OIO approval to invest in New Zealand.
The New Zealand public owns 18.76% of AIAL, Auckland City Council owns 12.63%, New Zealand Superannuation Fund Nominees Ltd 10.21%; Manukau City Council 9.95%; HSBC Nominees (New Zealand) Limited 5.84%; and National Nominees NZ Ltd, 5.69%.
In addition to the "various overseas people", the Australian public owns 7.03%; the United States public owns 4.41%; and the United Kingdom public 2.58%.
The transaction satisfied the criteria in section 16 of the Overseas Investment Act 2005 and would foster a "closer strategic and working relationship between the two airport companies, and provide QAC with capital to pursue development and expansion opportunities."
Mr Llewellyn told the Otago Daily Times the application was lodged with the OIO "as soon as we began discussions with QAC ... in late April".
"It was, in effect, a holding application for the maximum minority ... as soon as we began the serious discussions the minority position we ended up with became pretty clear.
AIAL did not intend to increase its shareholding to 49.9%.
"The situation would need to change quite a bit for that to happen," Mr Llewellyn said.
OIO manager Annelies McClure said a general condition of any consent granted under the Overseas Investment Act 2005 was the consent would lapse on the first anniversary of the date of consent.
"If the purchase does not take place within the specified period, but the applicant still wishes to proceed with the purchase, then the applicant will need to file another application for consent.
"Alternatively, if the applicant becomes aware ... that the purchase is unlikely to proceed within that period, the applicant could apply to vary the condition of consent to provide for a longer period," she said.
