Terry McCrann: Wrong place at the wrong time for Sydney airport
Sydney Airport has some of the sweetest acreage in Australia but when passengers numbers have dwindled from 9 million in the March quarter to 400,000 in the June quarter, that doesn’t count for much, writes Terry McCrann.
Terry McCrann
Don't miss out on the headlines from Terry McCrann. Followed categories will be added to My News.
Sydney Airport found itself in exactly the wrong place at the wrong time.
Not wrong strictly geographically: even, maybe especially, in a post-virus world, it’s got some of the sweetest acreage in Australia.
But wrong virtually geographically – at the end of all those flight paths just when the planes stopped flying down them.
In the March quarter Sydney “welcomed” 9 million passengers; in the June quarter it “welcomed” just 400,000. It’s going to be a long time before it “welcomes” 9 million in a quarter again.
This poses a tough decision for its security holders, asked to pony up $2bn.
The instos had just two days to decide, Tuesday and Wednesday; retail investors get three weeks. They get to see what those instos decided, what happens to SAC’s security price in the market; and indeed what the market more broadly does.
The issue price builds in quite a bit of buffer against a fall in the market – whether general or SAC-specific – for SAC holders and even more a buffer for the underwriter UBS which has to pick up any stock not subscribed for.
SAC last closed at $5.39. Both instos and retail can subscribe at $4.56 – that’s a 13.2 per cent discount on the $5.26 (very) theoretical ex-entitlement price.
Judging on the way Qantas retail holders stayed away (wisely) in droves – just 5 per cent of Qantas retail holders subscribed for just $72m of the $500m they were offered, even though they were getting their shares at a 9c discount to the $3.65 the instos had paid – SAC retail might be a tad reluctant.
Wisely, as it took a 13c rise in the Qantas share price to get back to that $3.56 on Tuesday.
Qantas and SAC face different aspects of exactly the same disaster – fewer planes and passengers. SAC is basically a monopoly property trust but with essentially only one (significant) ‘tenant’, Qantas.
We will have to see whether it does get that second tenant – Virgin; but if it does it will be a much slimmed version.
SAC is raising its money via the desired – and now almost non-existent – renounceable issue. That means if you don’t subscribe (both instos and retail), the shortfall is auctioned off and the proceeds come back to the non-subscribing holders.
All will depend on what happens in the market over the next few weeks. And what happens with the virus.
Originally published as Terry McCrann: Wrong place at the wrong time for Sydney airport
How the NBN has delivered just in time
The NBN has delivered, and it has done so in what can only be described as the ultimate — the hit-the-ground running immediate — stress test, rites Terry McCrann.
ABC hacks eyeing Media Watch gig
The ABC’s Media Watch host, Paul Barry, must be getting ready to step aside, judging by the number of leftists auditioning through their attacks on News Corp, writes Terry McCrann.