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Wellington International Airport Limited
Bond Issue Flyer – Series 2008, Tranche 1 Bonds
This Issue Flyer sets out the specific terms of the Bonds Wellington International Airport Limited
(“Airport Company”) is offering, and the steps an investor must complete to take up the offer.
This Issue Flyer is part of, and should be read together with, the Investment Statement.
BOND PROGRAMME Interest Payments
From time to time the Airport Company may offer The first interest payment will reflect the number of
Bonds under the Bond programme with different days from the Issue Date to the first Interest Payment
features. The Airport Company is currently offering Date. This payment will be made to the initial Bond
unsecured, unsubordinated, fixed rate Bonds. subscriber. All subsequent interest payments will be
paid to the person(s) registered as the Bondholder on
This Issue Flyer sets out the terms of the Airport the relevant Record Date.
Company Bonds. Other terms of the Bonds and
information about the Airport Company are included First Interest Payment Date: 15 May 2009.
in the Investment Statement. All defined terms in Other Interest Payment Dates: Semi annually in
this Issue Flyer can be found in the Glossary in the arrears on 15 May and 15 November.
Investment Statement.
Issue Principal: $50 million with the ability to accept
over subscriptions of up to $50 million.
BOND TERMS
Issue Price: $1.00 per Bond.
Opening Date: 2 December 2008.
Minimum Subscription: The minimum subscription
Closing Date: 1 April 2009, or such earlier date as the
is $10,000 with multiples of $1,000 thereafter.
Airport Company may determine, and announced by the
Airport Company to NZX. Underwriting: The Airport Company may make
arrangements with individual Brokers or Bank Selling
Issue Date: For each Bond that the Airport Company
Agents to underwrite a part of the Offer. It is not
has agreed to issue, the date on which the Issue Price
intended to seek underwriting arrangements for the
payable by the applicant for the Bond has been lodged
entire Offer.
to the Airport Company’s bank account.
Allotment: The Bonds will be progressively allotted
Maturity Date: 15 November 2013.
during the Offer Period. The Bonds will be allotted
Initial Interest Rate: The rate applying from the and will accrue interest from the date that applications
Opening Date will be 7.5% per annum. monies are banked.
Changes to Interest Rate: After a Bond has been Application for Listing
issued, the Interest Rate applicable to that Bond will
Application has been made to NZX for permission
only change if, on any Test Date, Total Interest Bearing
to list the Bonds and all other requirements of NZX
Debt exceeds 60% of Total Tangible Assets. In that
relating thereto that can be complied with on or before
situation, the Interest Rate shall increase by 0.50% per
the date of this Issue Flyer have been duly complied
annum over the Interest Rate applicable to the Bond
with. However, NZX accepts no responsibility for any
when it was issued, from and including the Interest
statement in this Issue Flyer.
Payment Date following that Test Date to but excluding
the next Interest Payment Date. However, the Airport Rating
Company may, at any time, without prior notice,
The Bonds have been assigned a rating of BBB+ by
change the Interest Rate it offers in respect of Bonds
Standard & Poor’s (Australia) Pty Limited.
that have not been issued.
HOW TO APPLY
Complete the Application Form included in the
Investment Statement.
Wellington Airport
Bonds Offer
Wellington International Airport Limited
Investment Statement for an offer of $50 million fixed rate Bonds
(with the ability to accept oversubscriptions of up to $50 million)
WELLINGTON AIRPORT BONDS OFFER 2009
1
Issued: 1 December 2008
Contents 1 Important information 2 Chairman’s Letter 5 Summary of main terms of the Offer 11 Company Overview 18 Answers to important questions 28 New Zealand taxation 30 Glossary 32 Application Form IBC Directory Notes This is an Investment Statement for the purposes of the Securities Act 1978 and has been prepared as at 1 December 2008. It is an important document and should be read in its entirety. Cover Photo: Southern view of the Airport Company’s runway. This Page: International departures.
Important information
(The information in this section is required under the Tell the adviser what the purpose of your investment
Securities Act 1978). is. This is important because different investments
are suitable for different purposes, and carry
Investment decisions are very important. They often
different levels of risk.
have long-term consequences. Read all documents
carefully. Ask questions. Seek advice before The written statement should contain important
committing yourself. information about the adviser, including:
Choosing an investment • relevant experience and qualifications and
When deciding whether to invest, consider carefully whether dispute resolution facilities are available
the answers to the following questions that can be to you; and
found on the pages noted below: • what types of investments the adviser gives advice
1. What sort of investment is this? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 about; and
WELLINGTON AIRPORT BONDS OFFER 2009
2. Who is involved in providing it for me? . . . . . . . . . . . . . . 19 • whether the advice is limited to investments
offered by 1 or more particular financial
3. How much do I pay? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 institutions; and
4. What are the charges? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 • information that may be relevant to the adviser’s
5. What returns will l get?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 character, including certain criminal convictions,
bankruptcy, any adverse findings by a court
6. What are my risks? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
against the adviser in a professional capacity and
7. Can the investment be altered?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 whether the adviser has been expelled from, or
prohibited from joining, a professional body; and
8. How do I cash in my investment?. . . . . . . . . . . . . . . . . . . . . . . . . 25
• any relationships likely to give rise to a conflict of 1
9. Who do I contact with enquiries
interest.
about my investment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
The adviser must also tell you about fees and
10. Is there anyone to whom I can complain
remuneration before giving you advice about
if I have problems with the investment? . . . . . . . . . . . . . 26
an investment. The information about fees and
11. What other information can I obtain remuneration must include:
about this investment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
• the nature and level of the fees you will be
In addition to the information in this document, charged for receiving the advice; and
important information can be found in the current • whether the adviser will or may receive a
registered prospectus for the investment. You are commission or other benefit from advising you.
entitled to a copy of that prospectus on request.
An investment adviser commits an offence if he
Engaging an investment adviser* or she does not provide you with the information
An investment adviser must give you a written required.
statement that contains information about the
The purpose of this Investment Statement is to
adviser and his or her ability to give advice. You
provide certain key information that is likely to assist
are strongly encouraged to read that document and
a prudent but non-expert person to decide whether
consider the information in it when deciding whether
or not to subscribe for the bonds.
or not to engage an adviser.
* An investment adviser is defined in the Securities Markets Act 1988 to mean (in summary) a person who gives investment advice (being
recommendations, opinions or guidance in relation to acquiring or disposing of securities) to members of the public.
Other important information No Bondholder, or any other person, may purchase,
Investors should note that other important offer, sell, distribute or deliver Bonds, or have in
information about the Bonds and the Offer is its possession, publish, deliver or distribute to any
available in the registered Prospectus and in person, any offering material or any documents
the Bond Documents. Copies of the registered in connection with the Bonds in any jurisdiction
Prospectus may be obtained free of charge from: other than in compliance with all applicable laws
and regulations. By purchasing the Bonds, each
Link Market Services Limited
Bondholder is deemed to have indemnified the
Level 12
Airport Company and the Trustee for any loss
120 Albert Street
suffered by any of them by reason of any breach of
Auckland
the above selling restrictions.
or from
Non-reliance
Wellington International Airport This Investment Statement does not constitute
WELLINGTON AIRPORT BONDS OFFER 2009
Main Terminal Building a recommendation by the Airport Company, the
Wellington International Airport Joint Lead Managers, the Trustee, nor any of their
Miramar respective directors, officers, employees or agents
Wellington to subscribe for or purchase any of the Bonds. None
of the Airport Company, the Joint Lead Managers,
or by phoning +64 (4) 385 5100.
the Trustee, nor any of their respective directors,
In addition, Wellington International Airport Limited officers, employees or agents accepts any liability
(“the Airport Company”) publishes: whatsoever for any loss arising from this Investment
• an annual report each year containing its Statement or its contents or otherwise arising in
independently audited financial statements. connection with the offer of Bonds.
2
This can be obtained from http://www. None of the Joint Lead Managers and the Trustee
wellingtonairport.co.nz/html/business/ have independently verified the information
financialreport.php contained in the sections entitled “Company
Overview”, “Answers to Important Questions”,
• monthly performance and quarterly financial
and “New Zealand Taxation” in this Investment
information, which is available on the Airport
Statement. In accepting delivery of this Investment
Company’s parent company website at http://
Statement, the recipient acknowledges that none of
www.infratil.com/content/view/1931/1/
the Joint Lead Managers and the Trustee, nor their
Offer only in New Zealand respective officers, employees, agents or advisers
This Investment Statement only constitutes an gives any warranty or representation of accuracy
offer of Bonds to the public in New Zealand and to or reliability and they take no responsibility for it.
investors in other jurisdictions where the Bonds may None of them shall have any liability for any errors
be lawfully offered. or omissions (including for negligence) in this
Investment Statement, and each recipient waives all
No action has been or will be taken by the Airport
claims in that regard.
Company which would permit an offer of bonds
to the public, or possession or distribution of any Each recipient of this Investment Statement
offering material in any country or jurisdiction must make its own independent assessment and
where action for that purpose is required (other investigation of the financial condition and affairs
than New Zealand). Bonds may only be offered for of the Airport Company as it may deem necessary
sale or sold in conformity with all applicable laws and base any investment decision upon such
and regulations in any jurisdiction in which they are independent assessment and investigation.
offered, sold or delivered. Definitions
Capitalised terms used in this Investment Statement
have defined meanings which appear in the Glossary.
Chairman’s Letter
Dear Investor
Wellington International Airport is the hub of New Zealand’s domestic aviation system and the international
gateway to the central regions of the country.
It caters for approximately 5 million passengers and 100,000 aircraft movements a year.
The Airport was opened in 1959 after one of the country’s largest feats of civil engineering. A hill was
removed, along with over 200 houses, and a large portion of the current runway was reclaimed from Cook
Strait. In the early 1970s the runway was extended a further 300 metres so that it could accommodate
trans-Tasman services and in 1999 the new terminal replaced the “temporary” converted aircraft factory and
hangar to produce a regional gateway which has won the support of Wellington.
The company which owns the Airport, Wellington International Airport
Limited, has also evolved. In 1998 the Crown sold its shareholding
and the Airport Company is now owned 66% by listed infrastructure
company Infratil Limited and 34% by Wellington City Council.1 The two
WELLINGTON AIRPORT BONDS OFFER 2009
shareholders have formed an excellent partnership and have strongly
supported the Airport’s development and growth. Since Infratil became
a shareholder the Airport Company has invested over $250 million in its
facilities and is committed to continuing to invest to ensure passenger
growth can be accommodated and services improved.
• Expansion of the international terminal is underway to relieve
congestion while providing an iconic structure to reflect the Airport’s
rugged coastal environment.
• Improvements to runway safety (through increased runoffs) have
3
been completed and the entire runway is shortly to be resurfaced.
• Ongoing enhancement to the domestic terminal, car parking,
bus connection and other facilities also continue.
The funds raised through this Bond issue will be used to help finance these investments and to repay Steven Fitzgerald,
Chief Executive,
bank debt. Over the short term it is anticipated that air travel may not continue its recent strong growth.
David Newman,
It will be affected by the recession. However, over the medium and long term, aviation is a global Chair of the
growth industry. More people are travelling more often than ever before. Airport Company
and Infratil
For the Airport Company the increasing integration of New Zealand and Australia into a single air Limited, Kerry
market will mean more airline services on offer and more growth opportunities. Looking further out, the Prendergast,
Director and
advent of smaller long-haul aircraft which can provide direct services between Wellington and Asia will
Mayor of
provide additional stimulus. Even before this occurs, the growth of Asian air travel will have positive Wellington
consequences for the whole New Zealand market.
This Investment Statement provides a description of Wellington International Airport Limited and the terms
of the Bonds being offered.
We are pleased to provide this opportunity for investors.
Yours faithfully
David Newman
Chairman
1
Neither Infratil nor Wellington City Council guarantee the payment
of interest or principal on the Bonds in whole or in part. The Council
has announced that it intends to investigate whether to sell down
its shareholding to 26%.
WELLINGTON AIRPORT BONDS OFFER 2009
4
Trans Tasman aircraft at the Airport Company’s Northern Pier.
Summary of Main Terms of the Offer
The key dates relating to the Bonds are set out Any application money received in respect of an
in the Issue Flyer accompanying this Investment application which is not accepted by the Airport
Statement. Company, whether because of late receipt or
otherwise, will be returned (without interest) to the
Issuer applicant as soon as reasonably practicable after
Wellington International Airport Limited (the Airport the Airport Company decides not to accept the
Company). A description of the Airport Company is application and, in any event, within 14 calendar
set out in the section entitled “Company Overview” days of the receipt of the application. Instructions on
on page 11 of this Investment Statement. how to apply for the Bonds are contained on page 19
Description under the heading “How Much Do I Pay?”
Direct, unsecured, unsubordinated, fixed rate debt Listing and quotation
obligations of the Airport Company.
Application has been made to NZX for permission
to list the Bonds and all the requirements of NZX
WELLINGTON AIRPORT BONDS OFFER 2009
Registrar
Link Market Services Limited. relating thereto that can be complied with on or
before the date of distribution of this Investment
Aggregate Principal Amount Statement have been duly complied with. However
$50,000,000, with the ability to accept NZX accepts no responsibility for any statement in
oversubscriptions of up to $50,000,000. this Investment Statement.
Currency The Airport Company intends that quotation of the
New Zealand dollars. Bonds on the NZDX will commence following first
allotment of the Bonds.
Denomination and minimum subscription
NZX ticker code “WIA” has been reserved for the
amount 5
Airport Company.
$1.00 per Bond. The minimum subscription amount
in respect of the Bonds is $10,000 and multiples of Maturity Date
$1,000 thereafter. The Maturity Date for the Bonds is set out in
the Issue Flyer accompanying this Investment
Issue Price
Statement. The Airport Company does, however,
Par ($1.00 per Bond, being the Principal Amount of
have the option of redeeming the Bonds as
each Bond).
described under the heading “Early Redemption” on
Who may apply page 21 of this Investment Statement.
Bonds are offered to New Zealand resident investors
Status of the Bonds
and investors in other jurisdictions where the Bonds
The Bonds constitute direct, unsecured,
may be lawfully offered. Some of the Bonds being
unsubordinated, fixed rate debt obligations of the
offered may be reserved for clients of the Brokers
Airport Company ranking pari passu and without any
and Bank Selling Agents listed in the Directory on the
preference among themselves and pari passu with
inside back cover. The aggregate Principal Amount
all other outstanding unsecured and unsubordinated
of Bonds to be so reserved may be up to $50 million.
obligations for borrowed money of the Airport
As Bonds will be issued throughout the offer period,
Company.
any remaining Bonds will be allocated to applicants
on a first come, first served basis.
The Airport Company may from time to time without If an application (at the old rates) is received after a
the consent of the Bondholders issue further bonds change in the Interest Rate offered and the Airport
or other debt instruments which rank behind, or Company has increased the Interest Rate, the
equally with, or which are secured so rank ahead of, increased rate will apply to that application. If the
the Bonds. However, for so long as any Bonds are Interest Rate has been decreased, the applicant will
outstanding, the Airport Company must ensure that, be notified, and within 14 calendar days can elect
on each Test Date, the following financial ratios are to either continue with the application (at the lower
maintained: Interest Rate) or be refunded any amount paid to the
Airport Company (without interest). If no election is
• Total Secured Debt does not exceed 10% of Total
made, the amount will be refunded (without interest).
Tangible Assets; and
Interest shall be payable from the date that each
• Total Interest Bearing Debt does not exceed 70% Bond is issued.
of Total Tangible Assets.
If the Interest Rate is changed subsequent to the
WELLINGTON AIRPORT BONDS OFFER 2009
Interest Rate Opening Date, Bonds issued at the new Interest Rate
The Bonds offered under this Investment Statement will not be fungible with those issued at the initial
shall pay interest at the Interest Rate applicable on Interest Rate. This may affect the liquidity of any
the date the application for that Bond is received by Bonds issued and is more fully explained under the
the Registrar. The initial Interest Rate for the Bonds heading “What are my risks?” on page 22.
will be set by the Airport Company on the Rate Set
Interest Payment Dates:
Date (the Opening Date, or such other date as may
Interest will be payable in arrears on the
be selected by the Airport Company). As such, the
Interest Payment Dates set out in the Issue Flyer
initial Interest Rate for the Bonds is not known at the
accompanying this Investment Statement.
6
date of printing this Investment Statement. The initial
Interest Rate for the Bonds will be announced by the The first interest payment for each Bond will be paid
Airport Company to NZX and is set out in the Issue to the original subscriber of that Bond irrespective
Flyer accompanying this Investment Statement. of any subsequent transfer before the first Interest
Payment Date (interest to original subscriber
After a Bond has been issued, the Interest Rate
‘’ITOS’’). After the first Interest Payment Date,
applicable to that Bond will only change if, on any Test
interest will be payable on each Interest Payment
Date, Total Interest Bearing Debt exceeds 60% of Total
Date to the Bondholder as at the Record Date
Tangible Assets. In that situation, the Interest Rate
immediately preceding the relevant Interest Payment
shall increase by 0.50% per annum over the Interest
Date. A more detailed description of how the interest
Rate applicable to the Bond when it was issued, from
rate is determined is set out under the heading
and including the Interest Payment Date following that
“What Returns Will I Get?” on page 20.
Test Date to but excluding the next Interest Payment
Date. However, the Airport Company may, at any time, New Zealand taxation:
without prior notice, change the Interest Rate it offers in Interest paid on the Bonds to a Bondholder who is
respect of Bonds that have not been issued. resident in New Zealand for New Zealand income
The Interest Rates applicable to the Bonds may, tax purposes or who is engaged in business in
therefore, differ depending on when the relevant New Zealand through a fixed establishment in
Bonds are issued. Applicants can obtain details of New Zealand (“Resident Bondholder’’) and is
the Interest Rates applicable from time to time by acquiring Bonds for the purpose of that business
contacting one of the Brokers or Bank Selling Agents may be required to be spread under the financial
listed in the Directory on the inside back cover or arrangements rules. Interest paid on the Bonds to
their investment adviser. Resident Bondholders will be income that is taxable
at the Bondholder’s relevant tax rate.Resident withholding tax will be deducted at the Use of proceeds
applicable rate from interest paid on the Bonds to a The net proceeds from the sale of Bonds will be
Resident Bondholder. Resident withholding tax will used to retire some existing debt, and any additional
not be deducted if a Resident Bondholder holds a proceeds will be used for the general operations of
valid RWT exemption certificate (and has provided a the Airport Company, including capital expenditure
copy to the Registrar). and growth opportunities that may arise.
Approved issuer levy will be deducted from interest NZX waivers
paid on the Bonds to a Bondholder that is not NZX has granted the Airport Company a waiver
a Resident Bondholder, unless the Bondholder from NZDX Listing Rule 11.1.1 to enable the
requests that non-resident withholding tax be Airport Company to decline to accept or register a
deducted at the applicable rate instead. transfer of Bonds if such transfer would result in the
Neither the Airport Company nor the Trustee is transferor or the transferee holding or continuing to
WELLINGTON AIRPORT BONDS OFFER 2009
obliged to gross-up or otherwise pay any additional hold Bonds with a Principal Amount of less than the
amounts to Bondholders as a consequence of the applicable minimum Principal Amount (or minimum
deduction of any withholding tax. multiple thereof).
A more detailed description of the applicable This waiver applies to all transfers of Bonds unless
New Zealand taxes is set out in the section entitled the transferee is a Bank or Market Participant (as
“New Zealand Taxation” on pages 28 to 29. those terms are defined in the NZDX Listing Rules),
in which case there shall be no minimum transfer
Form of Bonds amount. The Airport Company may not refuse to
The Bonds will be entered onto the Register register a transfer if the transfer is for all of the
maintained by the Registrar. No certificates transferor’s Bonds.
of title in respect of the bonds will be issued 7
The effect of the waiver from NZDX Listing Rule
to Bondholders. Title to the Bonds passes by
11.1.1 is that the minimum holding amount in
registration of a transfer. The Airport Company
respect of the Bonds will be Bonds with an aggregate
and the Registrar will rely on the Register for the
Principal Amount of not less than $10,000.
purpose of determining entitlements to interest
payments on each Interest Payment Date, and No underwriting
for the repayment of the Principal Amount of The Airport Company may make arrangements with
the Bonds when they are redeemed. The first individual Brokers or Bank Selling Agents listed in
interest payment for each Bond will be paid to the the Directory on the inside back cover to underwrite
original subscriber of that Bond irrespective of a part of the Offer. It is not intended to seek
any subsequent transfer before the first Interest underwriting arrangements for the entire Offer.
Payment Date (interest to original subscriber
‘’ITOS’’). After the first Interest Payment Date, Governing law
interest will be payable on each Interest Payment New Zealand.
Date to the Bondholder as at the Record Date
immediately preceding the relevant Interest
Payment Date.WELLINGTON AIRPORT BONDS OFFER 2009
8
Trans Tasman aircraft at the Airport Company’s Northern Pier.WELLINGTON AIRPORT BONDS OFFER 2009
9
Air New Zealand domestic aircraft on South West pier.WELLINGTON AIRPORT BONDS OFFER 2009
10
“The Rock” international terminal development.Company Overview
Introduction Trends
The Airport is the hub of New Zealand’s domestic Over the last decade, airports worldwide have
aviation system and one of the country’s three main gained from two distinct developments:
airports.
• More people are travelling by air more often than
Situated in metropolitan Wellington at Rongotai, 8km in the previous decade. Air travel has become
from the city centre, the Airport is located on a 110 possible for more people as personal incomes rise
hectare site which is owned freehold by the Airport while the real cost of air travel has fallen as aircraft
Company. and airlines have become more efficient and
passed these savings on to travelers.
History
• The current site opened in 1959, after lobbying • Airports have come to be operated as commercial
by the local Chamber of Commerce for a location businesses. Little more than a decade ago almost all
close to the city centre. major airports worldwide were state or municipally
WELLINGTON AIRPORT BONDS OFFER 2009
owned. They were often poorly managed and
• Construction of the Airport at the current site offered few amenities. Commercial ownership of
was a major exercise that included removal of airports has increased efficiency and resulted in
a hill, and approximately 200 houses, as well as better facilities for passengers and visitors.
significant reclamation of land from Cook Strait.
The original 1,630 metre runway was extended in
Wellington Airport Passengers 1960-2008
the early 1970s to enable DC8 aircraft to operate at
5,000
the Airport.
• The runway length has been the same since this
4,000
time and now accommodates Boeing and Airbus
jet aircraft flying within New Zealand and to the 11
Passengers 000’s
3,000
east coast of Australia and the Pacific Islands. New
classes of aircraft being developed may enable
further destinations to be serviced. 2,000
• Over this time period passenger numbers have
risen from 500,000 to over 5 million per annum.2 1,000
0
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
International Domestic
Source: Airport Company internal information
2
Airport Company Annual Report 2008Passenger Growth Australasia) to explore new market and route
While short-term passenger growth rates change, the opportunities.
medium and long-term growth trend has not.
• The aircraft makers Boeing and Airbus are
• Since 1998 the Airport’s annual passenger producing more efficient aircraft, which are
numbers have risen from 3.5 million to over expected to remove many of the technical
5 million; representing an average annual growth barriers to long-haul services from airports
rate of 3.5% per annum or an additional 150,000 such as Wellington.
passengers each year. Over the last 40 years
Aeronautical Income
average growth in passenger numbers has been
Aeronautical charges provide approximately 60% of
4.2% per annum, from the 950,000 passenger
the Airport Company’s total income and provide the
movements recorded in 1968.3
basis for the considerable investment required by
• New Zealand’s population growth was 1.1% per the Airport Company in aviation facilities.
WELLINGTON AIRPORT BONDS OFFER 2009
annum over both the last 10 and 40 year periods.4
These charges have been reset every five years since
New Zealanders are flying more often in general,
1997 in accordance with a statutory consultation
while inbound traffic has also contributed with
process within judicially defined parameters that
about 60% of the international passengers using
involves the Airport Company and its major airline
New Zealand airports being non-residents.
customers. While these consultations have involved
• Looking to the future, growth is anticipated to disputes in each of 1997 and 2002, they ultimately
continue (notwithstanding the occasional short resulted in agreement over pricing between the
term variations from the long term growth trends Airport Company and its major airline customers.
as shown in the graph on page 11). Events such
The 2007 consultation process also led to a judicial
as the oil shock of the 1970s, the Gulf War, the
12 review by Air New Zealand and a final outcome is
September 2001 terrorist attacks on the United
awaited. Refer to the section entitled “What are my
States, the SARS virus, and bird flu scares have
risks?” on page 22 for further details.
not disrupted the long term trend.
• Airlines are constantly innovating and improving Comparative Aeronautical
the quality and range of their services and the Income per Passenger
$14.00
price of their fares, and new airlines are entering
the market. $12.00
• Over the last decade Qantas and Pacific Blue $10.00
have established major domestic operations in
New Zealand. $8.00
• New airlines such as JetStar have expanded $6.00
onto the Tasman. Tiger Airways has
established in Australia from Asia and may $4.00
begin trans-Tasman services when economic
$2.00
conditions allow.
0
• In the meantime, long-haul air travel is
WIAL AIAL CIAL SYD ADE PER
undergoing significant change. Middle Eastern
Australian charges converted at NZ$0.85
airlines such as Emirates, Gulf and Etihad have Australian charges converted at NZ$0.85
Source: 2008 Annual Reports for Auckland International
significant aircraft orders which will enhance
Airport Limited, Christchurch International Airport Limited,
the development of global air travel services. and Adelaide Airport Limited. 2007 Annual Reports for
The substantial expansion of these airlines will Sydney Airport Corporation Limited and Westralia Airports
incentivise competing airlines (such as those in Corporation (Perth).
3
Airport Company internal information.
4
Statistics New Zealand, Demographic Trends 2007.
5
Statistics New Zealand, Demographic Trends 2007.The Airport Company considers that its Passenger and Property Income
aeronautical charges are reasonable by any $30 $6.00
measure. For instance, for the year to 31 March
2008, the Airport Company’s average per- $25
$5.00
passenger aeronautical income amounted to
$8.89. The most recent data shows that Auckland
Revenue per passenger
$20
and Sydney’s average income were over $12 and $4.00
Revenue $M
$13 per passenger respectively while two airports $15
that are similar to Wellington, Adelaide and Perth, $3.00
charged $13 and $10 per passenger respectively. $10
While Christchurch Airport’s charges are below the
$2.00
other airports shown, Christchurch has announced $5
a very significant investment programme and it
WELLINGTON AIRPORT BONDS OFFER 2009
is anticipated, as is common for airports, that an 0 $1.00
increase in charges will be necessary to provide a 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
return on the investment. Property Passenger Services Services Revenue/passenger
Passenger Services & Income
Over the last decade the Airport Company’s
Property Income
A decade ago the Airport’s buffer of “derelict” light
passenger services income has risen from $1.63 to
industrial land adjacent to the Airport had only low-
$4.34 per passenger and from $5.7 million to almost
value uses. As aircraft have become quieter, the
$22 million in aggregate in the 2008 financial year.
areas around the Airport have risen in value, and
The development of better airport services is a higher value uses of the Airport Company’s own
worldwide phenomenon, but the Airport Company 13
land have become practical. The most notable was
has particularly sought to showcase what is best in its the recent conversion of warehousing into a thriving
region rather than the traditional international brands shopping centre. As a consequence, over a 10 year
which give many airports a bland, impersonal feel. The period annual property rentals have risen from
Airport promotes the best of Wellington’s famous and $1.2 million to $7.5 million.
excellent coffee shops; Fuel, Wishbone and Mojo, the
region’s iconic apparel from Icebreaker, which opened Key Facts
its first ever shop at the Airport, and the Maori motif Catchment
inspired clothing of Kia Kaha. The Airport Company estimates that 70% of the
Airport’s passengers are arriving or departing from
The Airport Company has also developed its
Wellington with the remainder transiting to or from
advertising potential with a suite of internal and
other destinations.6
precinct billboards, light boxes and similar media.
As a part of this initiative the Airport Company The Wellington region population was 470,000
acquired the national “out of home” advertising in 2007, an increase of 25,000 people since 2002.
company, Isite Limited. Isite is a member of the Wellington’s population has more 20 to 45 year olds
guaranteeing group for the Airport Company’s than the national average with household income,
existing external funding. Isite guarantees the Bond employment and education all above the national
Obligations for so long as it is a wholly-owned average. All of these factors enhance the mobility of
Subsidiary of the Airport Company. the Wellington population.7
6
Based on 2003 information provided to the Airport Company by airlines.
7
Statistics New Zealand, Demographic Trends 2007.WELLINGTON AIRPORT BONDS OFFER 2009
14
The Airport’s main retail hall.Ownership Structure Development Projects
The Airport Company is owned 66% by listed The Airport Company has announced a number of
Wellington-based infrastructure company Infratil and projects that are either underway or will commence
34% by Wellington City Council.8 Infratil appoints in the near term.
four of the Airport Company’s directors while the
• Runway End Safety Areas
City appoints two, which has traditionally included
the Mayor. The New Zealand Civil Aviation Authority has
adopted an international aviation guideline that a
Ownership of Operations minimum of 90 metre safety areas are required at
The Airport Company owns all of the assets of the each end of the runway. Construction of the south
Airport other than those owned by tenants. For end safety area was completed in mid 2007 and the
example, the Airport Company owns the terminal, north end area was commissioned in September
but airlines may own check-in and lounge fittings. 2008. The total cost of the runway safety
WELLINGTON AIRPORT BONDS OFFER 2009
The Airport Company has freehold title to its land and enhancements was approximately $33 million.
none of the land or buildings is granted as security.
• Runway Overlay
The Airport Company operates what is known The Airport Company will be commencing a
as a “landlord model”. Its operational functions resurfacing of the runway during the upcoming
are limited to fire services and the management 2008/2009 summer. The total cost of the
of the terminal and airfield facilities. Air traffic resurfacing is estimated to be $12 million.
control is undertaken by Airways Corporation,
and security and other regulatory services by • Terminal Expansion – International Processing,
the relevant government agencies. All shops and Arrivals and Duty Free
passenger service facilities except car parking are These projects were completed at the end of 2007
operated by tenants. The Airport Company employs and resulted in capacity increases in departure and 15
approximately 90 of the 1,500 people who are arrivals processing to accommodate the growth
estimated to work at the Airport. in peak-time passenger numbers. The total cost of
these projects was approximately $22 million.
Capital Structure / Credit Rating
The Airport Company currently has approximately • Terminal Expansion – Gate Capacity and
$240 million of external debt of which $150 million International Departures
are bonds which mature in 2017. Funding provided At the current daily peak of five international
by this issue of Bonds will be used to repay some aircraft departures an hour the jet aircraft gates
existing debt and finance capital works. were fully occupied with one aircraft needing to be
parked off stand on some occasions.
The Airport Company has a corporate credit rating
of BBB+/Stable from Standard & Poor’s (Australia) An initial reconfiguration of the northern pier has
Pty Limited. Details of any separate rating obtained in been completed with the addition of one further
relation to the Bonds will be set out in the Issue Flyer. gate and alterations to the building which mean
that gates can be switched between domestic and
international services.
8
Neither Infratil nor Wellington City Council guarantee the payment
of interest or principal on the Bonds in whole or in part. The
Council has announced that it intends to investigate whether to
sell down its shareholding to 26%.The Airport Company has commenced Property
construction of “The Rock”, which is a further Over recent years increases to the value of land
expansion and enhancement of the international around the Airport have allowed the development
terminal development to provide a further aircraft of property which was previously occupied in
gate and improved departure lounge facilities for only low-value uses. The Airport Company owns
international departing passengers. This project is approximately 20 hectares of land not necessary for
budgeted to cost approximately $40.0 million for aviation use in the short to medium term, and so the
completion in 2010. potential income and value uplift is considerable.
• Terminal Expansion – Retail and Advertising The first major development entailed the
The Airport Company is committed to providing construction of a retail shopping centre to the
a vibrant retail offering that is reflective of west side of the runway which was completed
Wellington and work is currently underway on early in 2008 and is fully tenanted. It has provided
a popular facility for residents of Wellington’s
WELLINGTON AIRPORT BONDS OFFER 2009
the construction of two new shops and additional
billboards. southern suburbs, created the opportunity for further
development in future and increased the Airport
• Car Parking and Airport Access Company’s rental income.
Because of the Airport’s small site, developing
Further property development is likely to occur
space for car parking has presented a challenge to
when economic conditions allow. This may entail
ensure that capacity is kept available and charges
expansion of the retail centre, but options such
represent value for money. The Airport Company’s
as hotels and offices and aviation related facilities
approach to these constraints has been to develop
have been considered in the past and are likely to
a range of car park options for different users,
be reviewed again. The Airport Company is also
which range from covered car parks in immediate
16 undertaking an update of the Airport Company’s
proximity to the terminal, to parks which are more
Master Plan which will consider demand for various
remote and are accessed by shuttle bus.
uses of the Airport land and consider optimal long
The Airport Company has also improved the term location of facilities.
payment technology of its car parks with a system
which provides detailed monitoring of capacity
use and introduces the ability to offer a more
sophisticated range of tariffs. For example, “Park
Free” Saturday mornings encourages visitors to
the terminal at that “off peak” time.
Walkway and entrance covers have also been
built to provide shelter against Wellington’s
occasionally inclement weather.
Work on enhancement to the car parking
offerings and with regards to other Airport access
facilities is ongoing. Other recent developments
include an internal waiting area for bus
passengers and bike racks.Summary Financial Information
Year ended 31 March $000 31 March 2008 31 March 2007 31 March 2006 31 March 2005 31 March 2004
Revenue 88,376 76,493 66,422 58,648 54,362
Operating expenses 28,353 26,827 18,988 14,207 15,014
Operating Earnings before
interest, depreciation and
taxation 60,023 49,666 47,434 44,441 39,348
Investment property fair value
increase 642 5,585 - - -
Depreciation and amortisation 13,575 12,712 9,008 6,874 7,671
WELLINGTON AIRPORT BONDS OFFER 2009
Interest expense 16,617 12,632 13,376 12,222 13,248
Taxation expense 1,146 1,253 470 1,914 6,172
Profit after taxation, before
payments to shareholders 29,327 28,654 24,550 23,431 12,257
Payments to Shareholders 24,322 25,048 25,344 6,102 -
Transfer to retained earnings 5,005 3,606 (794) 17,329 12,257
17
Total assets 618,976 597,973 561,788 328,058 309,675
Assets funded by
Debt funding 222,974 209,974 180,049 145,000 155,000
Deferred tax 49,912 53,494 - - -
Other liabilities 21,615 17,207 14,803 13,884 6,607
Total equity 324,475 317,298 366,936 169,174 148,068
The information has been extracted from audited financial statements. The Airport Company adopted
International Financial Reporting Standards in 2008 and restated the 2007 financial comparative results. The
table shows that one impact of the change in financial reporting was to transfer $53.5 million from equity to
deferred tax in 2007. The deferred tax liability is not expected to result in any material future cash obligation.Answers to important questions
1. What sort of investment is this? • the average price, weighted by volume, of all trades
The Bonds of the relevant Bonds through NZDX over the 10
The Bonds offered under this Investment Statement Business Days up to the fifth Business Day before the
are debt securities and constitute direct unsecured, relevant redemption date.
unsubordinated, fixed rate debt obligations of the Where the relevant Bonds have not traded on NZDX
Airport Company and will rank equally with all other on at least half of the relevant 10 Business Days, the
unsecured and unsubordinated indebtedness of the average price of those Bonds for that period will be
Airport Company, except indebtedness preferred by law. determined by an Independent Adviser selected by the
The terms and conditions applicable to the Bonds are Trustee in accordance with the Bond Documents.
contained in the Bond Documents. Unless the Bondholder pays any withholding tax or
any other deduction required to be paid by the Airport
Trustee
Company before redemption, the redemption price
The Bonds are issued pursuant to the Bond Documents.
WELLINGTON AIRPORT BONDS OFFER 2009
will be adjusted accordingly as set out in the Bond
The Trustee holds on trust for the benefit of
Documents.
Bondholders the right to enforce the Airport Company’s
obligations under the Bonds. Holders of Bonds that are to be redeemed or purchased
will be given five Business Day’s notice prior to the
The Trustee does not guarantee the payment of interest
relevant Record Date. Such notice must be given at a date
or principal on the Bonds.
not less than 25 Business Days before the Maturity Date.
Interest
Further issues
The Bonds bear interest at a fixed rate (being the
The Airport Company may from time to time without
Interest Rate applicable to that Bond). Interest is
the consent of the Bondholders issue further bonds or
scheduled to be paid on the Bonds in arrears on each
18 other debt instruments which rank behind, or equally
Interest Payment Date.
with, or which are secured so rank ahead of, the Bonds.
A more detailed description of the Interest Rate which However, under the terms of the Bond Documents
applies to the Bonds and how it is determined is set out for so long as any Bonds are outstanding, the Airport
under the heading “What returns will I get?” on page 20. Company must ensure that, on each Test Date the
following financial ratios are maintained:
Redemption
The Principal Amount of the Bonds will be repaid by the • Total Secured Debt does not exceed 10% of Total
Airport Company on the Maturity Date (set out in the Tangible Assets; and
Issue Flyer accompanying this Investment Statement). • Total Interest Bearing Debt does not exceed 70% of
Bondholders have no right to require redemption of the Total Tangible Assets.
Bonds, except in the case of an Event of Default. This
NZDX listing
means that Bondholders have no ability to cash in their
Application has been made to NZX for permission to
investment, except following an Event of Default or by
list the Bonds and all the requirements of NZX relating
selling their Bonds in the secondary market.
thereto that can be complied with on or before the date of
Early Redemption distribution of this Investment Statement have been duly
The Airport Company has the right to redeem or complied with. However, NZX accepts no responsibility
purchase for cash all or some of the Bonds before the for any statement in this Investment Statement.
Maturity Date. The redemption or purchase price will be The Airport Company intends that quotation of the
the greater of: Bonds on the NZDX will commence following the first
• the Principal Amount plus accrued interest (less allotment of the Bonds.
any withholding taxes and any other deductions NZX ticker code “WIA” has been reserved for the
permitted by the Bond Documents); and Airport Company.2. Who is involved in providing it for me? Applications must be made on the Application Form
Issuer contained at the back of this Investment Statement.
The Airport Company is the issuer of the Bonds offered Payments
in this Investment Statement. The Airport Company’s Applicants who are members of the Austraclear
address is: System, or who are able to have payments made on
Main Terminal Building their behalf through the Austraclear System, may settle
Wellington International Airport their applications for Bonds on the Issue Date through
Miramar the Austraclear System.
Wellington Applicants who are not members of the Austraclear
The Airport Company, in its current corporate form, has System must pay for the Bonds applied for by a
been the owner and operator of the Airport since 1990. personal cheque or, if the application is for Bonds of
an aggregate Principal Amount of $500,000 or more,
A more comprehensive description of the Airport
WELLINGTON AIRPORT BONDS OFFER 2009
by bank cheque or other method acceptable to the
Company and its activities is set out above in the section Airport Company. Cheques should be in New Zealand
entitled “Company Overview” on pages 11 to 17. dollars drawn on a New Zealand branch of a financial
institution and submitted with the completed
Trustee
Application Form. Cheques should be made payable
Trustees Executors Limited is the Trustee of the Bonds.
to ‘’WIAL Bond Offer’’ and crossed ‘’Not Transferable’’
The Trustee’s address is:
and must not be post-dated.
Postal address:
PO Box 10519 Where to send your Application Form and
Wellington 6011 payment
Cheques should be delivered or sent, together with the
Physical Address: 19
Application Form, to:
Level 5
10 Customhouse Quay Link Market Services Limited
Wellington 6011 Postal address:
Tel: +64 495 0995 PO Box 91976
Auckland 1142
3. How much do I pay?
Issue price and minimum investment Physical Address:
The Principal Amount and issue price of each Bond Level 12
is $1.00. Applications to subscribe for Bonds must 120 Albert Street
be for a minimum Principal Amount of $10,000 (and Auckland
in multiples of $1,000 thereafter) and payment of the Applications for Bonds may also be lodged with any
total application amount in full must accompany the NZX Firm or any other channel approved by NZX.
Application Form. There is no maximum amount of
Bonds you may apply for, but applications for less Applications
than $10,000 will not be accepted. Some of the Bonds The Airport Company reserves the right to refuse all
being offered may be reserved for clients of the Brokers or any part of any application without giving a reason
and Bank Selling Agents listed in the Directory on the including (but without limitation) where an applicant
inside back cover. The aggregate Principal Amount of has not provided account details for payments by
Bonds to be so reserved may be up to $50 million. As direct credit.
Bonds will be issued throughout the offer period, any
remaining Bonds will be allocated to applicants on a
first come, first served basis.Any application money received in respect of an It is not possible to quantify as at the date of this
application which is not accepted by the Airport Investment Statement the exact amount of returns
Company, whether because of late receipt or Bondholders will receive and therefore no such amount
otherwise, will be returned (without interest) to the can be promised by the Airport Company. The return on
applicant as soon as reasonably practicable after the each Bond will depend on the following factors.
Airport Company decides not to accept the application
Interest Rate
and, in any event, within 14 calendar days of the receipt
The Airport Company will pay interest on each Bond
of the application.
at the fixed Interest Rate applicable to that Bond. The
If the Airport Company accepts an application in part, Airport Company will determine the initial Interest Rate
the balance of the application money (without interest) for the Bonds on the Rate Set Date. The initial Interest
will be refunded as soon as reasonably practicable and, Rate will be announced to NZX and is set out in the
in any event, within 14 calendar days of the receipt of Issue Flyer accompanying this Investment Statement.
the application.
WELLINGTON AIRPORT BONDS OFFER 2009
After a Bond has been issued, the Interest Rate
Where an applicant’s payment for Bonds is applicable to that Bond will only change if, on any Test
dishonoured, the Airport Company may cancel any Date, Total Interest Bearing Debt exceeds 60% of Total
Bonds issued to that applicant and may pursue the Tangible Assets. In that situation, the Interest Rate shall
defaulting applicant for damages suffered by the Airport increase by 0.50% per annum over the Interest Rate
Company. applicable to the Bond when it was issued, from and
Applications cannot be withdrawn or revoked. including the Interest Payment Date following that Test
Date to but excluding the next Interest Payment Date.
No cooling off
However the Airport Company may at any time,
There is no cooling off period during which an investor
without prior notice, change the Interest Rate it offers
20 can cancel his or her investment in the Bonds.
in respect of Bonds that have not been issued. The
4. What are the charges? Interest Rates applicable to the Bonds may therefore
differ, depending on when the relevant Bonds are
Applicants pay no fees or charges to invest in the
issued. Applicants can obtain details of the Interest
Bonds other than the Issue Price. A fee or commission
Rate applicable to the Bonds from time to time by
may be charged if Bonds are purchased or sold on
contacting any of the Brokers or Bank Selling Agents
the secondary market. The Airport Company takes no
listed in the Directory on the inside back cover or their
responsibility for the pricing action of secondary market
investment adviser.
participants. Bondholders are not required to pay any
fees, charges or commissions to the Trustee. All fees or If an application (at the old rates) is received after a
expenses payable to the Trustee or the Registrar will be change in the Interest Rate offered and the Airport
payable by the Airport Company. The Airport Company Company has increased the Interest Rate, the increased
will pay brokerage on new applications of 1.0% to NZX rate will apply to that application. If the Interest Rate
Firms for applications bearing that NZX Firm’s stamp. has been decreased, the applicant will be notified, and
The Airport Company reserves the right to vary the rate within 14 calendar days can elect to either continue
of brokerage paid, and will announce any variation to NZX. with the application (at the lower Interest Rate) or be
refunded any amount paid to the Airport Company
5. What returns will l get? (without interest). If no election is made, the amount will
Overview be refunded (without interest).
The information set out in this section should be read
If the Interest Rate is changed subsequent to the
in conjunction with the information set out under the
Opening Date, Bonds issued at the new Interest Rate
heading “What are my risks?” on page 22. Certain
will not be fungible with those issued at the initial
events could reduce or eliminate the returns intended to
Interest Rate. This may affect the liquidity of any
be derived from holding the Bonds.
Bonds issued and is more fully explained under theheading “What are my risks?” on page 22.The first determined by an Independent Adviser selected by the
interest payment for each Bond will be paid to the Trustee in accordance with the Bond Documents.
original subscriber of that Bond irrespective of any
Unless the Bondholder pays any withholding tax or
subsequent transfer before the first Interest Payment
any other deduction required to be paid by the Airport
Date (interest to original subscriber ‘’ITOS’’). After the
Company before redemption, the redemption price will
first Interest Payment Date, interest will be payable on
be adjusted accordingly as set out in the Trust Deed.
each Interest Payment Date to the Bondholder as at
the Record Date immediately preceding the relevant Holders of Bonds that are to be redeemed or purchased
Interest Payment Date. will be given five Business Day’s notice prior to the
relevant Record Date. Such notice must be given at a date
Interest is scheduled to be paid by the Airport Company
not less than 25 Business Days before the Maturity Date.
on the Bonds in arrears on each Interest Payment Date.
If an Interest Payment Date falls on a day that is not a Acceleration of Bonds on Event of Default
Business Day, the relevant payment will be made on the Upon the occurrence of any of the Events of Default
WELLINGTON AIRPORT BONDS OFFER 2009
next day which is a Business Day, without adjustment, set out in the Bond Documents, the Trustee may,
or further payment as a result thereof. and immediately upon being directed to do so by
an Extraordinary Resolution of Bondholders must,
The first interest period for each Bond will commence
declare the Bond Obligations to be immediately due
on (and include) the Issue Date for that Bond. Interest
and payable. However, none of the events listed in the
for each interest period shall be calculated on the
definition of Event of Default in the Bond Documents
Principal Amount of each Bond on a 365 day year basis.
will constitute an Event of Default, and the Bond
Repayment of Principal Amount on Maturity Date Obligations will not become immediately due and
The Principal Amount of the Bonds will be repaid by the payable, unless the Event of Default is continuing
Airport Company on the Maturity Date (set out in the unremedied and the Trustee has given a notice to the
21
Issue Flyer accompanying this Investment Statement). Airport Company declaring such event to be an Event of
Default and the Bond Obligations to be immediately due
Redemption by Bondholders
and payable.
Bondholders have no right to require the Airport
Company to redeem their Bonds unless an Event of The Events of Default are listed in the Bond Documents.
Default occurs. This means that Bondholders have In summary, the Events of Default include the following
no ability to cash in their investment except following events:
an Event of Default or by selling their Bonds in the • a failure to make any payment of any of the Bond
secondary market (if one develops). Obligations more than 10 Business Days after its due
date;
Early Redemption
The Airport Company has the right to redeem or • any breach by the Airport Company of any other
purchase for cash all or some of the Bonds. The material undertakings or obligations under the
redemption price will be the greater of: Bond Documents that, if capable of remedy, is not
remedied within 30 days of the Trustee notifying the
• the Principal Amount plus accrued interest (less
Airport Company of that breach and requiring the
any withholding taxes and any other deductions
Airport Company to remedy it; and
permitted by the Bond Documents); and
• if the Airport Company becomes insolvent, is placed
• the average price, weighted by volume, of all trades
into liquidation or any analogous procedure occurs in
of the relevant Bonds through NZDX over the 10
respect of it.
Business Days up to the fifth Business Day before the
relevant redemption date. The occurrence of these events only in relation to Isite is
not an Event of Default.
Where the relevant Bonds have not traded on NZDX
on at least half of the relevant 10 Business Days, the
average price of those Bonds for that period will beYou can also read
