Auckland Council says it has “paused” appointing a consultant to advise it on the sale of its 18% stake in Auckland Airport.
The Council had posted a tender asking for expressions of interest for independent advice on selling down the shares, with an expected start date of March 2023.
In an emailed statement, Auckland Council acting group treasurer Francis Caetano said no decision had been made to sell the Council’s 18% stake in the airport.
The Council had decided to “pause” the appointment of an advisor on the sale of Auckland International Airport shares while council worked through the budget process, the statement said.
Auckland Mayor Wayne Brown has pushed the sale of the airport shares, saying it would raise nearly $2 billion in much needed funds.
The tender document said the Council needed advice including on strategies to maximise value, a communication strategy and investor engagement.
It said the consultant would be expected to provide independent advice on the transaction execution process and provide analysis so any sell-down was completed efficiently, cost effectively and successfully.
Brown says the airport is costing Aucklanders money. He said Auckland ratepayers will pay $88 million in debt servicing costs to maintain a non-controlling shareholding in the airport.
The airport hasn’t been paying dividends and has seen its fortunes dented by the pandemic, but is expected to recover now that tourist numbers are rebounding.
But Brown says ratepayers have paid $240m in debt servicing costs to hold shares that “haven’t paid a cent in dividends”.
“The cost of holding these shares exceeds any return, and forecasts suggest this situation will not be reversed for Auckland Council as a shareholder in the foreseeable future. There are better uses for ratepayer capital.”
The Council is taking feedback on its annual budget until March 28.
6 Comments
All organisation's and companies should review their investments on a regular basis to assess return on investment.
On occasion, even though an investment is a long-term hold, lack of cash flow may require a sell down.
This could be one of those times.
The skill is not to waste the cash gain.
Seem to remember Helen Clerk blocking a sale to a Canadian pension fund. Don't recall if it was Akl Council's share or the whole bang shoot. Now Akl Council's share is only 18% so what's the concern?
Is it strategic to the country or Akl council? If the country let the govt buy Akl's council share. Can't see Labour doing it and definitely not National.
The half built underground train set has gone up in price since original 3.4 b estimate to 4.4 b in 2019 and now 5.5 b. With more revisions to come most likely. Auckland City is on the hook for half of it. The money has to come from somewhere. The question is will the consistent future dividend returns from a monopoly airport out perform the interest costs on 2.75 billion of debt. The returns from the rail loop are intrinsic. It will not earn fare revenue to cover its cost. It will require ongoing subsidy for ever. The property owners on the rail loop route are the big winners. But those profits don't go in the councils pocket.
the problem with selling it is two fold, one they will spend the money not pay down the debt, they never do look at all the things the government sold and then used that money to pay for more "assets" that cost money to maintain
and no longer gain any income from the asset they sold putting the burden on future generations
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