Issue of AIAL Prospectuses

Ministerial interference in distribution arrangements for Auckland Airport prospectuses would be counter-productive and undesirable, Finance Minister Bill Birch and SOE Minister Tony Ryall said today.

They were commenting on a letter published by Mr Phil Briggs, managing director of Equity Research Limited, claiming unfair practices by the Government's agent, Merrill Lynch, in distributing the prospectuses.

They said that, for very sound reasons, Ministers delegated this task to professionals hired for their independent expertise, so that none of the decisions could be perceived as operating on a political basis.

"It is normal practice for prospectuses and investment statements to be delivered directly to members of the New Zealand Stock Exchange (NZSE).

"Equity Research Limited are not members of the NZSE and would not normally receive prospectuses or investment statements as of right.

"Members of the NZSE are used for distribution purposes because they are bound by rules and regulations imposed by the exchange and must pass an accreditation process before membership is granted.

"NZSE members are the only parties who have the right to trade on the NZ stock exchange.

"Other entities can obtain copies of the prospectus and investment statement from the 0800 number or from New Zealand Post," they said.

"Copies of the prospectus and investment statement were delivered to the 0800 number and New Zealand Post first, brokers received their statements in the second delivery.

"Equity Research Limited trades through Auckland based Frater Williams, a member of the NZSE. Equity Research can obtain copies of the prospectus and investment statement from Frater Williams, or from the 0800 number or from New Zealand Post. "Merrill Lynch has provided additional copies of the Investment Statement to Frater Williams specifically for Equity Research's needs.

"Distribution in the manner described does not constitute an unfair trade practice, merely it reflects market norms. Equity Research Limited can obtain the prospectus and investment statement from a number of sources.

"The government is promoting distribution to ordinary New Zealanders through the broker firm allocation, the size of the public pool and through the extensive advertising campaign.

"Equity Research, through their association with Frater Williams, and by accessing the 0800 number and NZ Post shops, can adequately advise their clients on the float of AIAL," the Ministers said.