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Thu 9 Aug 2007 10:29 AM

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NZ minister backtracks on airport sale

Trade Minister Phil Goff says he is only opposed to the sale of the 22% stake held by local councils.

New Zealand Trade Minister Phil Goff has backtracked on comments made earlier this week that the government gave its backing to those opposed to the NZ$2.6 billion ($2.08 billion) bid by Dubai Aerospace Enterprise (DAE) to acquire a majority stake in the country’s busiest airport.

Goff has since claimed his statement that the government did not want to see key public utilities sold off to private companies was only referring to the 22.8% of Auckland International Airport Limited (AIAL) owned by Manaukau and Auckland city councils, quoted New Zealand’s National Business Review.

Goff has also denied trying to pre-empt the decision of fellow ministers whose job it will be to decide whether a controlling stake in the airport can be sold to an overseas buyer under the Overseas Investment Act.

The trade minister’s remarks have caused a stir within the government, with Prime Minister Helen Clark and others publicly stating that his comments had not compromised the government’s ability to act independently.

Land Information Minister David Parker, who along with Associate Finance Minister Trevor Mallard will make the final call on the whether the deal goes ahead, has insisted Goff’s comments have not influenced his judgement.

In an attempt to allay growing hostility to the deal from local councils and the public, DAE on Tuesday issued a statement that it plans to retain AIAL’s listings in both Auckland and Australia if its bid is successful.

The company said its proposals did not require shareholders to sell all their shares.

Members of both Manaukau and Auckland city councils have raised concerns over it falling into foreign hands, and without their backing DAE could have a problem gaining the 75% shareholder approval needed to allow the deal to go ahead.

Under the offer, which values the whole of airport at NZ$5.6 billion, a new company will be created, in which DAE will have a stake of 51 to 60%. The bid has received the backing of AIAL's board.

Auckland airport handles about 70% of New Zealand's international traffic and is mid-way through a four-year NZ$500 million upgrade to runways and terminals.

DAE also said the airport was in need of recapitalisation in order to maximise its growth potential and that this could not be achieved under its existing shareholder and management structure.

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