Adelaide Advertiser – Qantas hurdle lowered
Nick Luccinelli in the Adelaide Advertiser reports that consortium bidding $11.1 billion to take over Qantas has restructured its offer to boost its chance of success and told the airline’s shareholders it is now time to make a decision on the takeover.Airline Partners Australia (APA) said after talking to its financiers it had lowered the minimum shareholder acceptance condition to 70%, from 90%.
The easing of the condition will make it easier to get the offer over the line, after some institutional investors took strategic stakes in Qantas and indicated they could block the deal.
But APA warned the carrier’s debt would rise on the back of a plan to reduce Qantas’ capital by $4.5 billion that would be funded by debt.
APA director Bob Mansfield said it was time for shareholders to make a decision on the $5.45 cash bid.
“In our view, investors have had ample time to assess our offer,” Mr Mansfield said.
“It is now time for Qantas shareholders to act.”
He said APA was concerned many shareholders were discouraged from accepting the offer because of opposition from a small number of “vocal” shareholders.
“By effectively lowering that condition to 70 per cent, shareholders can be confident that the offer will be successful,” he said.
The decision to lower the threshold follows weeks of uncertainty after Qantas 4-per-cent stakeholder Balanced Equity Management said it would reject the offer.
That declaration, combined with expectations UBS Global Asset Management might use its stake to also reject the bid, led to concerns APA would be unable to fulfil its 90-per-cent acceptance condition, delist Qantas and take full ownership.
The closing date of the offer was extended to May 4.
Under the changes announced yesterday, Qantas could remain listed although APA said it remained keen to acquire all of its shares.
APA currently has acceptances of 30% of Qantas stock and is expected to gather a further 40% held by hedge funds.
Mr Mansfield said he did not know what UBS intended to do with its Qantas holding.
“UBS hasn’t indicated anything to us,” he said. “The negatives I have outlined . ……..will worry some shareholders and they will move away from the register.”
He noted if APA did acquire 70 per cent of Qantas it would be removed from major indices, making the stock less attractive to fund managers.
Mr Mansfield also warned shareholders Qantas was facing a number of “serious competitive threats” from the expansion plans of other airlines such as Virgin Blue, Emirates and Etihad.
“APA firmly believes that in the current environment of increasing competition, the APA offer continues to represent an attractive offer,” Mr Mansfield said.
Qantas already plans to expand its aircraft fleet to increase its domestic capacity by 14 per cent and spend $13 billion on new aircraft in the next few years.
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Report by The Mole
John Alwyn-Jones
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