Treasury Report: Air New Zealand: Due Diligence of Air New Zealand &
Quantum and Pricing of Tranche B Equity
Date:
7 November 2001
Treasury Priority:
High
Security Level:
Commercial Sensitive
Report No:
T2001/1832
Action Sought
Action Sought
Deadline
Treasurer/Minister of Finance
Note
Before meeting with Rob
Cameron & Treasury officials
on Wednesday, 7 November at
7.00pm
Associate Minister of Finance
(Hon Trevor Mallard)
Note
Before meeting with Rob
Cameron & Treasury officials
on Wednesday, 7 November at
7.00pm
Contact for Telephone Discussion (if required)
Name
Position
Telephone
1st Contact
Linda Dixon
Senior Analyst
471 5079 (wk)
9
John Wilson
Principal Adviser,
Government and
International
471 5936 (wk)
Commercial Sensitive
T2001/1832: Air New Zealand: Due Diligence & Quantum and Pricing of Tranche B Equity
Page 2
7 November 2001
GD/44/1
Treasury Report: Air New Zealand: Due Diligence of Air New Zealand
& Quantum and Pricing of Tranche B Equity
Executive Summary
Investment in Air New Zealand is high risk, as set out in a memorandum dated 5 November
2001 from the Crown’s advisers (Cameron & Co and PA Consulting Ltd) to you. Air NZ must
take steps to address the issues raised in that memo as soon as possible. Without attention
to these issues, there is considerable risk that the airline will seek further capital from the
Crown in due course. In addition, in the event there are further adverse events that affect the
confidence of the travelling public, the detriment caused to Air NZ’s recovery plan could be
difficult to overcome without further financial assistance.
At the time of preparing this report, the Treasury has not received final advice from the
Advisers regarding the valuation, financial flexibility and capital structure requirements of Air
NZ nor the recommended quantum and pricing of the Crown’s Tranche B equity injection.
We expect to receive this advice verbally this afternoon. The issues will be the foc