"Auckland Airport Adds Retail Focus To Bond"

Tuesday, May 25, 2004

INTERVIEW: NZ Auckland Airport Adds Retail Focus To Bond
By John Barton 
DOW JONES NEWS


WELLINGTON (Dow Jones)--Auckland International Airport Ltd. (AIA.NZ) is
widening the focus of its bond sales to include retail investors as it
seeks to raise up to NZ$125 million from the sale of mid-dated bonds. 

"We're in the final stages of putting together the prospectus for a bond
issue that will be retailable and is aimed to launch in mid-June," said
Paul Mens, the company's chief financial officer, in an interview with
Dow Jones Newswires Tuesday. 

Mens said he is talking with institutional investors this week. 

Auckland Airport's issuance will involve offering further NZ$25 million
tranches of its existing November 2006 and November 2008 bonds, he said.
There are NZ$50 million of both bond maturities already on issue. 

The company also will offer NZ$75 million of a new June 2009 maturity. 

The retail and wholesale offering will be used to refinance the
repayment of NZ$164 million of April 2004 bonds, which has been
temporarily financed by commercial paper and a cash advance facility
from a local bank. 

The lead manager and book runner for the bond issue is Bank of New
Zealand Ltd., while First New Zealand Capital is organizing broker and
co-lead manager. ABN AMRO and Forsyth Barr are co-managers for the
issue. 

Investors will be able to buy the bonds as either floating rate or fixed
rate, Mens said. 

"I would expect retail investors will opt for fixed rate, while
wholesale investors will go more for floating rate," he said. 

He also said Auckland Airport planned to hold a meeting of its bond
holders next month to change their documentation so that the bonds are
fully retail compliant. 

The main changes to the documentation will be the removal of a debt
covenant and some technical changes involving wording, Mens said. 

The debt covenant targeted for removal requires the company's equity be
at least 40% of total assets. 

A planned shift by Auckland Airport to international reporting standards
would result in a different measurement of its revaluation reserves,
currently around NZ$450 million, and could cause a technical breach of
the debt covenant, Mens said. 

The shift in reporting standards would reduce the company's reserves by
around NZ$150 million. 

The company also proposes to increase the interest rate cover provided
by profits to two times from a current 1.5 times. 

Auckland Airport bondholders will also get compensation if the company
suffers a large credit rating downgrade. If the company's rating slips
from the current A+ to BBB+ or worse, the coupon interest rate on their
bonds will step up by 50 basis points.


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