NZX Error Causes Air NZ Rights Trading to Stop, Wrong Price for Rights and Shares
MARTIN DE RUYTER/STUFF
Air New Zealand’s capital increase allows eligible shareholders to purchase two additional shares for each share they already own.
A mistake by the New Zealand stock exchange, NZX, in pricing Air New Zealand shares and rights has added confusion to an already complex capital raise the airline is undertaking, the New Zealand Shareholders Association said.
Air New Zealand’s rights were due to begin trading on Monday morning as the national carrier seeks to raise $1.2 billion from shareholders. Each share held in Air New Zealand entitles the owner to purchase two new shares at 53c per share.
At 9:59 a.m., Air New Zealand and NZX said the reference price for Air New Zealand shares and the rights were incorrect on www.nzx.com.
They said the correct benchmark prices were 77.5 cents for Air New Zealand shares and 24.5 cents for the rights.
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The price of Air New Zealand rights showed 10c on the NZX website.
Market announcements from Air New Zealand and NZX at 10:12 a.m. indicated the halt had been lifted, with trading resuming in shares of Air New Zealand at 10:15 a.m.
However, there had been no announcement that trading in the securities had been halted.
At 11:26 a.m., Air New Zealand and NZX said the rights had been suspended in relation to how NZX had implemented the rights instrument.
He said no trading halts had been applied to Air New Zealand securities.
At 11.47am another note was issued by Air New Zealand and NZX stating that the reference price for each right has been updated to 49c.
The price adjustment was made to reflect the correct ratio of one right exercised for two Air New Zealand shares, he said.
Rights trading resumed at 11:55 a.m., he said.
Shares of Air New Zealand were trading as low as 80c on the NZX, down from $1.16 at Friday’s close. The stock price was 93 cents by late afternoon.
At the end of the day, the price of rights was still showing 10c.
NZX said this would be updated on the first rights trade or overnight.
NZX said the incorrect NZX benchmark prices were solely due to an internal error in the NZX system.
“NZX apologizes for any inconvenience caused.”
NZX later said in a statement that no rights were traded during the disruption.
“We apologize for any confusion this has caused for investors and market participants.”
The trading halts are not expected to impact the opportunity the rights issue provides to Air New Zealand shareholders.
Approximately 2.3 million new shares of Air New Zealand will be issued under the rights offering, representing an increase of approximately 200% of existing shares.
New Zealand Shareholders Association chief executive Oliver Mander said he was concerned and “disappointed” by the NZX error due to the high proportion of retail investors among Air New Zealand and Air New Zealand shareholders. the complexity of the offer.
“The confusion over the NZX this morning is not helping matters in terms of sending a clear, consistent and simple message about the value of the offer for these investors,” Mander said.
He said around 11% of Air New Zealand’s shareholders were retail investors, many of whom would be relatively inexperienced Sharesies investors.
Air New Zealand’s offer material was clear, but the offer was still very complex, he said.
“It’s a really difficult offer to understand.”
It is fortunate that the NZX caught the error early and the rights were not traded, he said.
“So no one has lost value on either side, buying or selling, as a result of this morning’s error.”