APA set to change the rules!
A report in The Herald Sun says that embattled Qantas buyout group Airline Partners Australia is believed to have asked its bankers to waive a key lending condition to keep alive the $11.1 billion bid for the airline.
The Australian and North American partnership wants to cut the minimum acceptance condition from 90 per cent, the level approved by its lending syndicate of foreign banks and a source close to the partners yesterday suggested the figure could be as low as 70 per cent, but if that were to occur Qantas would remain a listed entity and APA would have to concede its key strategy to take the business private.
The report goes on to say that the rearguard action, triggered by UBS Nominees advice late on Monday that it held a deal-breaking 10.4 per cent stake in the airline, is aimed at outmanoeuvring shareholders that refuse to sell into APA’s offer of $5.40 a share.
APA, comprising Allco Finance, Macquarie Bank and North American interests TPG and Onex Corp, have previously declared its offer conditional on obtaining 90% cent of Qantas shares.
UBS now has sufficient stock to kill the bid as it is presently structured and Paul Fiani, UBS Global’s head of Australian equities, has left the situation precariously poised by refusing to declare his hand.
Mr Fiani and David Sissons, MD of Melbourne-based Balanced Equity Management, have already told the partners that Australian listed stocks had improved 10% since APA lodged the buyout offer last December and Mr Sissons advised the market last Friday that he would keep his firm’s 3.6% stake because it would cost more to find replacement stocks.
UBS and Balanced Equity want APA to improve the offer, a move prevented by the Takeovers Law, with under the existing legislation APA only able to come back and offer a higher price once the present offer expires.
UBS and Balanced Equity’s separate moves coupled with Deutsche Bank’s announcement yesterday it was also holding 8.4% of Qantas left APA with very few options to salvage the offer.
A source close to APA suggested the partners could wait and hope the market falls or UBS’s Mr Fiani has a change of heart during the remaining time until the bid expires on April 20 and it was also suggested that some of the shares UBS recently acquired on behalf of client investors in a hedging strategy might go to APA in last-minute sales during the closing stages of the offer.
The revised plan now being put to the syndicate of foreign banks would leave Qantas as a listed entity with its shares continuing to trade on the stock exchange and also Qantas would be left with a dysfunctional share register with APA controlling the business but left to answer to a handful of minor stakeholders.
Qantas shares improved 6c yesterday to close at $5.15.
Report by the Mole with material from The Sun Herald
John Alwyn-Jones
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