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Air New Zealand's investment in Virgin Blue

Direct News Source

21-Feb-2011 Air New Zealand has been advised by Virgin Blue following their shareholder identification process, that their current foreign ownership level is 49.78%. This exceeds the 49% statutory limit for foreign ownership of an Australian international airline.

Air New Zealand's 14.99% interest in Virgin Blue has been through a combination of direct share purchases and equity swaps. Following the advice from Virgin Blue of the level of foreign ownership, Air New Zealand will move to hold 0.8% of its interest in Virgin Blue through equity swaps. These swaps confer no ownership rights but provide price protection for purchase at a later date.

When the level of holding by other foreign shareholders reduces sufficiently, Air New Zealand will convert the remaining swaps into a direct shareholding. This approach has allowed Air New Zealand to fix its Virgin Blue entry price while maintaining the flexibility to cooperatively manage the foreign shareholding limits relating to its entry.