Air NZ announces revised Crown support package

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

14 December 2021

Air New Zealand updates on revised Crown support package pending capital raise
Air New Zealand announces the entry into a revised Crown support package comprising a
further $500 million of additional liquidity to better position the airline during the period up to its
recapitalisation, including an ordinary equity raising. The revised package, with overall liquidity
support available increased to $2 billion, comprises:
• a new agreement, which gives Air New Zealand the ability to issue up to $1 billion of
non-voting redeemable shares to the Crown; and
• a reduction in the existing secured facility from $1.5 billion to $1 billion, with an
extended term to January 2026.
Ongoing uncertainty
On 13 August 2021, Air New Zealand, following consultation with the Crown, announced a
further deferral of its planned equity raise until the first quarter of 2022. Since that
announcement, the airline has been impacted by the recent domestic lockdowns and the
ongoing Covid-related travel restrictions across its international network.
The Government has recently outlined a plan of phased reopening of borders from early 2022,
which, in the airline’s view, provides an indicative pathway to reopening New Zealand for
international travel. However, the future impacts of Covid remain uncertain and circumstances
continue to change all over the world.
In that context, the airline has been considering its financial support requirements during the
period up to a planned equity raising – which the airline is still targeting for the first quarter of
2022 - together with what further support and flexibility may be needed if material and
unexpected events were to occur in 2022 such that it becomes prudent to consider a further
delay to the planned capital raise.
Revised support package
While the airline, with the support of the Crown, remains focused on an ordinary equity raise, it
is important that the airline has sufficient flexibility to withstand presently unforeseen delays
without relying entirely on increasing debt levels. In that context, the airline and the Crown have
agreed to modify the Crown financial support for Air New Zealand and the overall liquidity
support for Air New Zealand has increased to $2 billion, as follows:
(a) Air New Zealand is able to issue up to $1 billion of redeemable shares to the Crown
(Redeemable Shares); and
(b) the existing facility limit under the secured Crown loan facility has been reduced from
$1.5 billion to $1 billion and the maturity has been extended from September 2023 to
January 2026 (Amended Crown Loan).
The key terms of the Redeemable Shares and the Amended Crown Loan are set out below.

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

The terms of the Amended Crown Loan and of the Redeemable Shares have been negotiated
between Air New Zealand and the Crown on an arm’s length basis with each party having been
independently advised.
It is Air New Zealand’s intention that all amounts outstanding under the Amended Crown Loan
and any issued Redeemable Shares will be repaid from the proceeds of the company’s
proposed equity raise, together with an aligned debt capital markets transaction. The Crown
has confirmed to the airline that it shares this expectation.
KEY TERMS OF THE REDEEMABLE SHARES
Conditions for
subscription
Air New Zealand can call for the Crown to subscribe for up to $1
billion of Redeemable Shares once at least $850 million is drawn
under the Amended Crown Loan. The minimum amount that can be
called is $20 million and in integral multiples of $10 million.
A call cannot be made if:
• Air New Zealand has been subject to an insolvency event;
• Air New Zealand has raised at least $1 billion of ordinary
equity;
• all of the Redeemable Shares issued have been redeemed;
• Air New Zealand has provided an irrevocable written notice to
the Crown that Air New Zealand does not need to issue any
more Redeemable Shares; or
• following the scheduled redemption date (as described below).
Redeemable at
Air NZ’s option
The Redeemable Shares are redeemable at Air New Zealand’s
option at any time, with a scheduled redemption date of 14
December 2046 (as may be extended in accordance with the terms
and conditions of the Redeemable Shares). For example, the
scheduled redemption date shall be automatically extended by five
years if Air New Zealand has not completed an equity raise of at
least $1 billion.
Accounting
treatment
Air New Zealand expects these Redeemable Shares to be treated
as equity for accounting purposes.
Distribution
payable
A distribution is payable quarterly to the Crown at a base rate, plus
a margin of 3.5% until 31 December 2023.
The margin over the base rate steps up to 5.5% from 1 January
2024 until 31 December 2026 and steps up to 7.5% from 1 January
2027.
The base rate is the 3 month rate designated “FRA” rate displayed
as calculated and published by the New Zealand Financial Markets

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

Association (3 month BKBM Rate) on the first day of each quarter.
If the 3 month BKBM Rate is not available on the relevant date, the
base rate is calculated by using linear interpolation by reference to
available rates over a similar period. If the 3 month BKBM Rate is
not calculated or published for any reason, the base rate is
determined by the Crown taking into account market rates and
conditions.
Distribution
deferral at Air
NZ’s option
Air New Zealand has the option to defer distribution on the
Redeemable Shares, and must do so in certain circumstances,
including upon an insolvency event.
If a distribution has been deferred on the Redeemable Shares, the
unpaid amount of the distribution cumulates, capitalises and
compounds on each dividend payment date and will be added to all
amounts outstanding to the Crown. Air New Zealand will not be
able to pay dividends on its quoted ordinary shares during any
period whilst a distribution in respect of the Redeemable Shares
has been deferred.
Restrictions on
use of proceeds
The proceeds of the issue of Redeemable Shares cannot be used
to repay amounts drawn under the Amended Crown Loan without
the Crown's prior consent. In effect this ensures that the proceeds
of the issue of these shares are incremental liquidity in addition to
the loan proceeds, and not used as a mechanism to repay secured
debt provided by the Crown.
Non-voting
The Redeemable Shares are non-voting and the Crown has no
ability to convert them to ordinary shares, so the Crown's voting
rights will not change as a result of the issue of Redeemable
Shares.
Ranking on a
liquidation
The Redeemable Shares rank equally with ordinary shares on a
liquidation of AIR but are capped at a maximum aggregate amount
equal to the aggregate issue price of all Redeemable Shares on
issue and all dividends which have accrued and cumulated.

KEY TERMS OF THE AMENDED CROWN LOAN
Amount
$1 billion consisting of a tranche of $850 million (Tranche A) and a
tranche of $150 million (Tranche B). Tranche B can only be drawn
once Tranche A is fully drawn and subject to the Company
providing the Crown with an updated operating plan.
Maturity January 2026.

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

Purpose General working capital (with limited exceptions).
Interest rate A base rate plus the margin below.
The base rate is the “FRA” rate displayed as calculated and
published by the New Zealand Financial Markets Association
(BKBM Rate) on the first day of the relevant interest period. The
BKBM Rate is a floating rate and can move up or down.
If there is no BKBM Rate for such period, the base rate is
calculated by using linear interpolation by reference to available
rates. If the BKBM Rate is not calculated or published for any
reason, the base rate is determined by the Crown taking into
account market rates and conditions.
Tranche A Margin
2.5% per annum stepping up by 1.5% from the first date of drawing
Tranche B (and stepping down by 1.5% on and from the date of
repayment and cancellation of Tranche B).
Tranche B Margin 4.0% per annum.
Fees
1.0% per annum line fee calculated on the limit of each of Tranche
A and Tranche B.
Cancellation
Rights
Subject to certain limited exceptions (including termination of the
facility in full at the maturity date and/or the replacement of the
facility) the limit cannot be reduced below $100 million.
Financial
Covenants
None.
Other key terms
A prohibition on payment by Air New Zealand of any dividends or
other distributions to holders of ordinary shares (including the
Crown) while any amount is available to be drawn under the facility
and any amounts remain outstanding under the facility.
The Crown has the ability to seek repayment through a capital raise
by the airline or converting the loan to equity (subject to compliance
with laws and any necessary regulatory and/or shareholder
approvals).
Air New Zealand and certain of its subsidiaries give security for the
loan over their assets (subject to certain exceptions).
Other Covenants
and events of
default
Air New Zealand giving various other typical operational and
informational undertakings and representations and typical events
of default.

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

NZX Waivers from NZX Listing Rules
NZ RegCo has granted Air New Zealand waivers from the relevant requirements under the
NZX Listing Rules to obtain shareholder approval for entry into and performance of the
Amended Crown Loan and the Redeemable Shares with the Crown, subject to the conditions
specified in those waivers which are available at
https://www.nzx.com/companies/AIR/announcements.
One of those NZX conditions requires Air New Zealand to convene a shareholders' meeting for
shareholders to consider and vote on an ordinary resolution to ratify the entry into the Amended
Crown Loan by 31 December 2022 (unless the Redeemable Shares and Amended Crown Loan
no longer remain in place at that time). If that occurs, the relevant notice of meeting convening
that shareholders' meeting would provide further information to shareholders about both the
Redeemable Shares and Amended Crown Loan. As part of the restructure of its liquidity
support for the airline, the Crown (acting by and through the Minister of Finance) has committed
to Air New Zealand that it would, in its capacity as the holder of its ordinary shares in Air New
Zealand, vote in favour of such a ratification resolution.
The airline’s current intention remains that such a meeting will be unnecessary given Air New
Zealand’s plans to raise equity in early 2022.
Liquidity update
As at 14 December 2021, the airline has drawn $505 million of the existing Crown Loan. It is
currently estimated that drawings could be approximately $900 million by late February or
March 2022. This reflects the estimated cash flow impact of ongoing travel restrictions including
as set out in the airline's announcement on 17 September 2021 and the previously
communicated repayment of $300 million of PAYE which is required in early 2022.
Dame Therese Walsh
Chairman
Ends.

Investor enquiries:
Leila Peters Jennifer Page
GM Corporate Finance General Counsel & Company Secretary
leila.peters@airnz.co.nz jennifer.page@airnz.co.nz
+64 21 743 057 +64 27 909 0691


For media enquiries, please contact: Air New Zealand Communications.
Email: media@airnz.co.nz │ Phone: +64 21 747 320 │ Twitter: @AirNZMedia