APA is moving the goal posts
A www.news.com.au report says that Airline Partners Australia could move as early as this week to try to neutralise opposition to its $11 billion takeover bid, perhaps by cutting the minimum acceptance level from 90% to 80%.
APA it appers has been in discussion with its bankers on potentially recasting the debt deal to allow a lower acceptance level, but the problem for its bankers is that a lower acceptance level wouldn’t guarantee APA taking full control of the airline, putting in doubt key cost savings.
APA had been forced to reassess its strategy after shareholder Balanced Equity Management last month said it wouldn’t accept the bid, raising the prospect of a group of funds blocking the takeover.
There is also speculation that shareholder UBS Global Asset Management, could join with Balanced Equity to block the deal and that unions could also gain shareholder support.
APA so far has acceptances for just over 30% of Qantas, with its bid set to close on April 20 unless extended.
While APA must notify the market of an extension by April 13, it is keen to maintain momentum and could make an announcement on an extension today, before the Easter break.
APA is now facing rising pressure from hedge funds to cut its minimum acceptance level, which would allow the bid to go through and so allow the hedge funds to cash out at a profit.
Hedge funds now control about 40%, with APA focusing on lobbying fund managers with long-term holdings to accept the bid, arguing that Qantas faced mounting competitive pressures at home that could cloud its long-term earnings outlook.
Domestically Qantas is facing new competition from Singapore-backed Tiger Airways which expects to start a domestic service later this year, while Virgin Blue is boosting capacity.
Internationally, Middle Eastern airlines Emirates, Etihad and Qatar Airways have all been granted approval to expand services to Australia.
Report by The Mole
John Alwyn-Jones
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