Air NZ update on capital raise timing and Crown loan

Capital Raise8 April 2021AIRIndustrials

Stock exchange listings: New Zealand (NZX: AIR) / Australia (ASX: AIZ) / ADR (OTC: ANZLY)

MARKET ANNOUNCEMENT
Air New Zealand postal address: Private Bag 92007, Auckland, 1142, New Zealand
Investor Relations email: investor@airnz.co.nz
Investor website: www.airnewzealand.co.nz/investor

9 April 2021

Air New Zealand update on capital raise timing and Crown loan
On 12 February 2021 Air New Zealand re-confirmed to the market its intention to complete an
equity capital raise by 30 June 2021. In that context, the Company referred to a letter received
from the Minister of Finance confirming the Crown would participate in that equity capital raise to
maintain a majority shareholding, subject to Cabinet being satisfied with the terms of the proposed
equity capital raise.
Since then the Company has continued to work with the Crown and its advisers on the airline’s
capital structure and funding needs, with a view to completing an equity capital raise by 30 June
2021. This work continues to be informed by the evolving circumstances related to the global
impact of the Covid-19 pandemic, including the Government’s announcement of the Maintaining
International Air Connectivity scheme
1
, the March 2021 public announcements on vaccination
programme timing, and the potential implications for broader border reopenings, and the
announcement of the Trans Tasman quarantine free travel bubble to commence on 19 April, which
are all fundamental to Air New Zealand’s financial performance.
In light of these evolving circumstances, the Crown and the Company have agreed it would be
appropriate to defer the equity capital raise to allow time to assess these evolving circumstances
further. Consequently, the Company and the Crown have signed a binding term sheet to amend
the existing Crown standby loan facility (“the facility”) which, together with the deferral, the Company
considers to be in its best interests in order to ensure sufficient liquidity through to completion of
that capital raise.
Timing for the capital raise
Air New Zealand’s Board continues to assess the airline's capital structure and longer-term funding
needs and expects the structure, once finalised, will have components of both debt and equity (“the
proposed capital raise”).
The proposed capital raise is now targetted to be undertaken before 30 September 2021.
With this revised timing in mind and given the critical role the Company has in New Zealand’s
economy and society, the Crown has reconfirmed its longstanding commitment to maintaining a
majority shareholding in the airline, and subject to Cabinet being satisfied with the terms of the
proposed capital raise, the Crown would participate in the equity capital raise in order to maintain
a majority shareholding. The Crown intends to participate by purchasing the number of new shares
necessary to maintain a majority shareholding. Those confirmations are set out in a letter from the
Minister of Finance to the airline dated 8 April 2021.
Air New Zealand’s intention is that all amounts outstanding under the facility (including as amended
as described below) will be repaid from the proceeds of the proposed capital raise.

1
Previously known as the International Airfreight Capacity Scheme.

Stock exchange listings: New Zealand (NZX: AIR) / Australia (ASX: AIZ) / ADR (OTC: ANZLY)

MARKET ANNOUNCEMENT
Air New Zealand postal address: Private Bag 92007, Auckland, 1142, New Zealand
Investor Relations email: investor@airnz.co.nz
Investor website: www.airnewzealand.co.nz/investor

Amended terms of the facility
To ensure the Company has sufficient liquidity through the period until completion of the proposed
capital raise, the existing facility with the Government has been renegotiated and Air New Zealand
has entered into a binding terms sheet with the Crown to effect agreed amendments summarised
below.
The terms sheet is conditional on Air New Zealand and the Crown entering into an amending deed
reflecting the terms sheet and NZX Regulation Limited issuing waivers in relation to NZX Listing
Rules 5.1.1 and 5.2.1 (as it did when the original facility was put in place in March 2020), as well
as other conditions precedent which are generally within Air New Zealand's control or which are
usual for these types of transactions.
The facility is to be amended to provide an increase of up to $600 million in additional liquidity,
bringing the size of the total facility to $1.5 billion. The facility will continue to be provided in two
tranches, a first tranche of $1.0 billion with a reduced margin of 2.5-5.0% per annum and a second
tranche of $500 million with a reduced margin of 4.0-5.0% per annum, plus a base rate calculated
by reference to the Bank Bill Benchmark Rate (“BKBM”). In addition, a reduced commitment fee of
1.0% per annum will be payable calculated on the limit of each of tranche one and tranche two.
See the table below for a summary of the pricing changes and how the margin steps up in certain
circumstances.
The change in pricing will take effect in two steps, with the reduction in commitment fee taking
effect from the effective date of the amendment to the facility, which is anticipated to be in the
second half of April 2021, and the reduction in margin applying from 27 May 2021.
The facility will now be available through to September 2023 which is an extension of 16 months.
Other commercial terms of the facility remain as outlined in the Company’s announcement from 20
March 2020.
The facility amendments have been negotiated on an arm’s length basis with each party having
been independently advised.
Summary of changes to Crown facility terms

Tranche Existing facility Amended facility
Tranche Size
First Tranche NZ$600 million NZ$1,000 million
Second Tranche NZ$300 million NZ$500 million
Pricing
2

First Tranche ~7.0 - 8.0%
per annum
3.5% per annum
3

Second Tranche ~9.0% per annum 5.0% per annum
4

2
Pricing includes aggregate of the commitment fee and margin. The interest rate applicable to drawings is equal to
BKBM plus the margin.
3
The margin will step up by 1.00% for drawings after 29 October 2021 and by a further 1.50% from the first date of
drawing the Second Tranche.
4
The margin will step up by 1.00% for drawings after 29 October 2021.

Air NZ welcomes announcement of Tasman bubble Waiver from NZX Listing Rules 5.1.1 and 5.2.1

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