APA moves the goalposts and lowers the barriers

Airline Partners Australia (APA), the consortium attempting to acquire Qantas Airways Ltd for $A11b has lowered its acceptance condition on the bid to 70% from 90% after talks with its debt providers.

In the interests of sending this breaking news to its subscribers as speedily as possible, TravelMole is reproducing the following as a direct quote from the APA release and TravelMole offers no comment at this time: –

Following successful negotiations with its financiers, Airline Partners Australia (APA) today announced that it will waive all conditions to its offer for Qantas (including the 90% minimum acceptance condition) and declare the offer unconditional if:

** APA receives acceptances of 70% or more of Qantas shares; and

** there has been no breach of any of the conditions of the offer (which has not been waived by APA) at, or prior to, that time.

APA is also extending the offer by 14 days and it is now scheduled to close on Friday 4 May 2007.

A Director of and spokesman for APA, Mr Bob Mansfield AO, said that more than half of Qantas shareholders (by number) have already accepted the APA offer.

“We believe the overwhelming majority of Qantas shareholders support the APA offer and the Qantas Board’s recommendation that the offer represents great value for shareholders.”

“APA is concerned that many Qantas shareholders have become discouraged from accepting the offer in the belief that the opposition to the offer from a small number of vocal shareholders may prevent us reaching the 90% acceptance condition. By effectively lowering that condition to 70%, shareholders can be confident that the offer will be successful.

“Remaining Qantas shareholders should accept the offer now if they want the offer to proceed.”

“We believe that our cash offer of $5.45 per share is full, fair and reasonable.”

“All the necessary regulatory clearances have been received and shareholders have been given sufficient time to assess our offer.”

“The offer is unanimously recommended by the Independent Directors of Qantas and has beenconfirmed to be fair and reasonable by the Independent Expert.”

“The Independent Expert has stated that if this offer is not accepted, the Qantas share price is likely to fall.”

“Qantas shares have never traded at or above our offer price,” Mr Mansfield said.

Mr Mansfield said the enhanced offer in no way altered undertakings APA had made to the Federal Government in relation to Qantas.

New Facility and Update on APA’s Intentions

APA has secured commitments from its financiers for a new facility that APA can utilise should it receive more than 70% but less than 90% acceptances. The new facility has an initial term of 3 years, extendable to 5 years in certain circumstances.

APA will lodge with ASIC and ASX today a Supplementary Bidder’s Statement which describes the new facility and also sets out APA’s intentions in the event that APA closes the offer owning less than 90% of Qantas.

APA’s intentions in the event that APA closes the offer owning less than 90% of Qantas include:

** procuring that APA’s nominees are appointed to the Qantas Board in place of all the non-executive directors currently on the Qantas Board;

** a focus on achieving medium term results; and

** consistent with APA’s strategy in relation to a 100% acquisition of Qantas, APA will propose that Qantas significantly increase its borrowings.

Competitive Threats and Challenges

“While there has been a broad increase in the share market since the offer was launched, a number of serious competitive threats have recently emerged.

“Some of these threats were factored into APA’s offer when announced.”  “They are now real.”

“In response to these developments, Qantas has announced a substantial expansion in its aircraft fleet which will increase its domestic capacity by 14% and has also foreshadowed an intention to spend $13 billion on new aircraft in the next few years.”  “This is significantly more than its market capitalisation.

“With the proven aviation sector experience of a number of APA’s investors and with the full support of the existing Qantas management team, APA believes these challenges are capable of being managed.”

It’s Time for Qantas Shareholders to Accept

“APA firmly believes that in the current environment of increasing competition, the APA offer continues to represent an attractive offer to the remaining Qantas shareholders who have not yet accepted.”

“We urge all remaining Qantas shareholders to accept APA’s offer of $5.45 cash per share without further delay,” Mr Mansfield said.

Direct reproduction by Travel Mole from the APA release.

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