Russell McVeagh advises on massive Auckland Airport capital raising

The transaction involved a $1.2bn institutional placement and share purchase plan.

Russell McVeagh advises on massive Auckland Airport capital raising

Russell McVeagh has advised Auckland Airport on a major capital raising effort involving a $1bn fully underwritten institutional placement and a $200m share purchase plan.

Border control has tightened with COVID-19 necessitating the implementation of travel restrictions worldwide, affecting the airport’s revenue stream.

“The COVID-19 pandemic has had a significant impact on Auckland Airport’s operations and will continue to do so under the current border restrictions, and through the subsequent recovery period. Impacts to Auckland Airport’s operating environment have been characterised by a substantial decline in international and domestic passenger numbers and a material decline in aeronautical and non-aeronautical revenue,” said Auckland Airport CEO Adrian Littlewood in a statement to the ASX on 6 April.

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In anticipation of the pandemic’s drawn-out negative impact, the airport, which is listed on both the ASX and NZX, has developed a plan to reinforce its balance sheets and stay capitalised, putting the company in a strong position after the crisis.

“Auckland Airport has moved swiftly to respond to the abrupt changes in the market, and our first priority has been to ensure the ongoing safety and security of our operation. Auckland Airport will have a critical role to play in New Zealand’s long-term recovery, and we need to act now to secure our future,” said board chair Patrick Strange.

Auckland Airport expects to utilise the proceeds from the placement in order to meet operating, investment and cash flow obligations “under a range of recovery scenarios.” The NZX also granted a trading halt to the company in order to facilitate the placement.

The airport was advised on the transaction by Russell McVeagh’s corporate team, led by corporate partner Ian Beaumont. He was supported by fellow partner David Raudkivi and solicitors Kristina White and Victoria Manning.

Leading Australian firm King & Wood Mallesons served as Australian legal counsel in the deal.

In addition to the equity raise, Auckland Airport has measures in place to manage cash flow and limit expenditures, including obtaining extensions to bank facilities that are due to mature.

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