Group in challenge to airport transaction

REVIEW SOUGHT: An influential group is challenging Auckland Airport being allowed to buy into Queenstown Airport.

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A Queenstown business group mounting a legal challenge to Auckland Airport being allowed to buy into the town's council-owned airport says an issue of national importance is at stake.

The Queenstown Community Strategic Assets Group is seeking a judicial review of Queenstown Airport's sale last month of a 24.99 per cent stake to Auckland Airport through the issue of new shares.

The defendants are Queenstown Airport and the Queenstown and Lakes District Council, which, until the surprise sale announcement, had owned 100 per cent of the airport.

Air New Zealand is also seeking a judicial review in separate proceedings.

Queenstown Airport chief executive Steve Sanderson has confirmed that the first the council knew of the deal between the airports was "12 hours before the transaction went through".

Auckland Airport paid $27.7 million for the stake. Under the deal, Queenstown Airport can exercise an option for Auckland Airport to increase its shareholding to 30-35 per cent at any time up to June 30 next year.

A spokesman for the business group, comprising some of the tourist playground's most wealthy and influential business people, said in failing to consult the council fully on the partial sale of its own airport, directors of Queenstown Airport had "ridden over democracy".

Aucklanders, whose assets would soon come under a super-city council structure, should be taking notice, he said.

The decision of the Overseas Investment Office shows Auckland Airport successfully applied to buy up to to 49.9 per cent of Queenstown Airport – 15 per cent higher than what has been previously talked about publicly. The Auckland-based listed company had to apply for consent because it is 36 per cent foreign owned.

It is understood the business group's lawyers will ask the judicial review to consider, among other issues, whether the provisions of the Local Government Act 2002, which requires council-controlled trading organisations to issue a statement of intent every year to their councils, should take precedence over a 1996 clause in Queenstown Airport's constitution which says it can issue new shares without offering them first to its shareholder.

A hearing has yet to be set by the High Court at Christchurch.

At an extraordinary meeting of the Queenstown council yesterday it was decided to defend the case.

- © Fairfax NZ News