1 Dec 2008

Wellington council may sell airport shares

8:26 pm on 1 December 2008

Wellington City Council is looking to sell shares in the city's airport to cut debt.

The council holds a 34% stake in Wellington airport, with the rest owned by investment company Infratil.

In November, the council embarked on a review of its spending as it struggles to keep down rate rises while funding a $46 million sports centre and a major upgrade to blocks of flats.

Wellington mayor Kerry Prendergast says the council is a minority shareholder and its stake should be reduced to fund developments in the city.

Ms Prendergast says the airport shares do not yield a good return on the amount invested and the money would be better spent in other ways.

She says Infratil is obliged to consult the council as long as it retains a 26% stake, and the extra 8% it holds above that does not affect its level of control.

However, business analyst Rob Mercer says the council may struggle to sell the 8% parcel of shares under the airport's ownership structure.

Mr Mercer, head of research at Forsyth Barr, says Infratil is likely to have the first option to buy the shares but is not likely to take a larger stake in the company.

He says the most likely other buyer would be the Government's superannuation fund, but even it might be wary, given the ownership structure.