Air NZ announces revised Crown support package

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: o 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 o 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 can be found in a table in the attached document. 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. 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. End CA:00384616 For:AIR Type:MKTUPDTE Time:2021-12-14 08:30:42