Unclear if Qantas was over the 49% foreign ownership during the APA bid

In what could be said to be a characteristically terse and extremely brief media release yesterday afternoon, Qantas CEO, Geoff Dixon announced that the foreign shareholding level in Qantas is 44.5%, according to the most recent reconciliation of the company’s share register.

He added that the reconciliation was undertaken by Qantas’ share registry, Link Market Services, adding that the previous reconciliation carried out by Link Market Services and released on 30 May 2007 showing foreign ownership just below 50%.

He said in the release, “Foreign shareholding is trending down and we are confident that our share register is in compliance with the Qantas Sale Act”.

What is less clear is whether during the APA bidding process the foreign shareholding in Qantas went over the magical 49%, with industry analysts saying they are confident it did.

When asked the 49% foreign ownership question by The Mole this morning Qantas Media Relations Manager Simon Rushton said that Qantas had issued a press release in May regarding that issue, in addition to the one yesterday and that he was not willing to comment any further.

In May Mr Dixon was as guarded as yesterday, saying that Qantas believed the level of foreign shareholding in the company was below the regulatory requirement of 49%. 

By believing rather than confirming that was the case, it could be said that he was saying that he did not actually know, with Mr Dixon saying Qantas had experienced massive turnover in its shares during and after the close of the takeover bid by Airline Partners Australia, making reconciliation of its shareholding, despite extensive monitoring, extremely difficult.

He added, “A reconciliation was commenced on 4 May and we were advised yesterday by Link Market Services, our share registry, that the foreign shareholding at that date was just below 50%.”

He also said, “However, some 55% of Qantas shares have traded since 4 May and Link Market Services believes this figure may already be out of date.”

Mr Dixon said market intelligence indicated the selling since 4 May had been by investors associated with foreign hedge funds and substantial buying has been by Australian interests, adding, “Although turnover in Qantas shares remains high, and we have commenced another reconciliation, we believe our current register is in compliance with the Qantas Sale Act.”

He said Qantas was working with lawyers and other advisers to investigate alternative methods of monitoring foreign shareholding in line with the requirements of the Qantas Sale Act, adding, “The system we have used since the privatisation of Qantas has served us exceedingly well.”

“However, this system does come under pressure if market participants do not comply with their obligations regarding timely disclosure of relevant interests, which has been the experience since the APA bid was announced.”

This morning when The Mole asked Simon Rushton if Qantas could categorically confirm that the foreign ownership of Qantas had remained below the 49% at all times, he referred me to the press releases and refused to comment any further.

The Sydney Morning Herald reports this morning that Qantas has taken two months to respond to an “urgent” Federal Government request to declare whether foreign shareholding has breached the 49% cap, adding that the biggest hint that Qantas breached the cap before the the Airline Partners Australia takeover bid collapsed in early May was the airline said a reconciliation released on May 30 showed foreign ownership was “just below 50 per cent”.

In addtion, a Qantas spokesman would not say whether “just below 50%” meant it was over 49%, giving the same message to the SMH as The Mole, “There’s nothing to add to either of those statements”.

In addition, the SMH says that fuelling suspicions that Qantas was about 60%foreign owned at the time of the APA bid, when dozens of overseas hedge funds piled into the stock, Qantas has also refused to comment on levels of ownership before May 30.

Deputy Prime Minister and Minister for Transport and Regional Services Mark Vaile welcomed the Qantas announcement on ownership,a dding, “I expect Qantas to comply at all times with these requirements,” he said. “The act plays an essential role in ensuring that Qantas remains Australian-based and under Australian control”

He did not comment on the level of foreign ownership at any time during the APA bid, but said, “I have asked the chairman (Margaret Jackson) to look at putting in place arrangements that will enable them to monitor the levels of foreign ownership in a more timely manner.”

Very interesting!

Report by The Mole