Air New Zealand ‘Rights’ Issues Plagued By Listing Errors During Opening At New Zealand Stock ExchangeApril 5, 2022
An error made by New Zealand Exchange or NZX created confusion around Air New Zealand latest recapitalization initiative with trading of the Rights halted on Monday April 4th before a fix was applied.
Part of a $2.2 billion recapitalization plan announced March 30th, the three-parts plan aimed to first, raise $400 millions under a new loan facility that replaced the previous Government-backed, then raise another $600 millions issuing redeemable shares to majority shareholders (the Government or The Crown in this case which owns 51% of the airline capital) and finally secure $1.2 billion from transactions under which each investor already owning a given number of shares is given the opportunity to purchase an equal number of Rights, with one Right amounting to two shares. Traded at the New Zealand Exchange, the $1.2 billion Rights issuing transaction required a number of price adjustments as the number of shares of the airline could potentially increase by 200%.
Under the Rights transaction prospectus, each instor could acquire a new share at 53 cents, a 61% discount from Air New Zealand’s current share price of $1.38. However according to a John Anthony article on the website stuff.co.nz, as the transaction opened on Monday morning at the New Zealand Exchange, the Rights were listed at 10 cents a piece even though both Air New Zealand and the Exchange insusted that the Rights were in fact being offered at 24.5 cents per unit. This price discrepancy prompted a halt in the trading of the Rights, but not in the trading of the shares as these were listed at their correct traded price. Subsequently, as Air New Zealand and the Exchange concurred that the Rights could be re-priced at 49 cents each, the erronous 10 cents price was still showing. The listing error issue was not really solved until the day after, with profuse apologies issued by the New Zealand Exchange. For Air New Zealand which has received $850 million from the government to shore up its liquidity as funds dried during the Covid19 halt in travel, anticipating a recovery not only means eliminating debts while strengthening its balance sheet, but also appeasing investors.