The proposed sale of Auckland Council’s 18 per cent shareholding in Auckland International Airport Ltd (NZX:AIA) could raise around $2 billion, thereby reducing the debt servicing cost to ratepayers by at least $88 million a year and cutting next year’s rates rise by almost a third, Auckland Mayor Wayne Brown said today.
The sale of the minority shareholding is part of Mayor Brown’s 2023/24 budget proposal, which will be put to the council’s Governing Body next week for consultation in 2023.
“Next year, Auckland ratepayers are set to fork-out $88 million in debt servicing costs to maintain a non-controlling shareholding,” Mayor Brown said.
“With interest rates rising, the cost of debt servicing could soon reach $100 million a year for ratepayers.
“Over the last three years, ratepayers have paid $240m in debt servicing costs to hold a bunch of shares that haven’t paid a cent in dividends. The cost of holding these shares exceeds any return, and forecasts suggest this situation will not be reversed for Auckland Council as a shareholder in the foreseeable future. There are better uses for ratepayer capital.
“If the airport needs additional capital for new projects, Auckland ratepayers could be asked to stump up extra cash or see our ownership stake fall even lower.
“Every cent we raise from the sale of the 18 per cent minority stake would be used to lower net debt. The money we save from debt servicing in 2023/24 will be used to reduce rate rises by about a third from levels feared and, in 2024/25, priority will be given to help support new initiatives for local boards.”
