Sydney Airport sold
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PM Archive - Tuesday, 25 June , 2002 00:00:00
Reporter: Ian Henderson
COMPERE: The Prime Minister, John Howard, and the Treasurer, Peter Costello, have just made a whole lot more money to repay part of what remains of Commonwealth Government debt.
The Southern Cross Consortium, led by Macquarie Bank, is the successful bidder for the airport and the purchase price is a fraction less than $5.6 billion.
The amount exceeded most expectations, it has led the Labor Party to call for some of the cash to be spent on new investment and it has led the Government to refocus its privatisation campaign on Telstra.
IAN HENDERSON: Canberra Airport and the airports of five state capitals, were privatised during the past five years. Those sales yield a total of $3.8 billion to the Federal Government. But on Monday, the Southern Cross Consortium, in which Macquarie Bank manages 53 per cent of the funds, will hand over a cheque for $5.396 billion in exchange for one, the biggest and the most important of the nations airports, Sydney. A further $192 million to buy the Ansett terminal at Sydney Airport as well.
Macquarie Bank CEO, Allan Moss, told a press conference in Sydney this afternoon, that he and his colleagues in the consortium believe the purchase is good business.
ALLAN MOSS: We feel that the price is a very satisfactory price and as you'll hear from my colleagues, compares very well with alternative, with other airport purchasers and with alternative investments.
IAN HENDERSON: Allan Moss says, expected earnings from the project, of 14.3 times the price being paid and that he says makes it almost as good a prospect as toll roads and better than investments in things like retail property trusts and the Sydney central business district. Even so, the total amount involved surprised most outsiders, that have been tipping a figure in the range 4-5 billion dollars, rather than $5.6 billion. Finance Minister, Nick Minchin, the Ministry in charge of the Howard Government's privatisation program, says the proceeds will go to help pay off public sector debt.
NICK MINCHIN: Consistent with out long-standing policy, we will use all the proceeds, all the net proceeds from this sale, to reduce Commonwealth Government debt. We have reduced that debt by some $61 billion since we came into office. As you know, we were left with a huge mountain of debt and the net $4.2 billion that we will receive from the sale of the airport will all go to further debt reduction and that will save tax payers some $250 million a year in interest payments they'd otherwise have to make on the outstanding debts.
IAN HENDERSON: And Nick Minchin says, it's now time to look forward to the sale of the second half of Telstra.
NICK MINCHIN: The um, the big remaining issue is the 50 per cent of Telstra that the Government still owns.
IAN HENDERSON: Labor's transport spokesman, Martin Ferguson, says the Federal Opposition supports the sale of the airport. He claims it represents the end point, the privatisation plans of former Labor governments. But Martin Ferguson says at least some of the $5.6 billion should be spent on new transport infrastructure.
MARTIN FERGUSON: Now a question of the Howard Government actually using its windfall from the sale of Sydney Airport, to actually do something about investment in the future. Sydney Airport was payed for over many years by our parents and grandparents. They were actually prepared to invest in our infrastructure. But the proceeds of the sale should therefore be correctly used to assist in retiring debt, but also to make a very strategic investment in our future.
IAN HENDERSON: While there are some analysts who think Southern Cross is paying too much for its acquisition, Macquarie Bank and its partners are confident that the investment will pay-off. One way they plan to meet their target, of a 20 per cent return on funds invested in the project, if they take advantage of what they see as a coming burden in international travel. Part of the spin-off is expected to come from more passenger flights. But another part is likely to come from an expanded retail sector at the airport itself. But while individual investors will be able to get part of the action indirectly, there are no plans to list the Consortium on the Stock Exchange at present. Why would that be part of the plan, with the market in its current weak condition.
PRINT FRIENDLY EMAIL STORY
PM Archive - Tuesday, 25 June , 2002 00:00:00
Reporter: Ian Henderson
COMPERE: The Prime Minister, John Howard, and the Treasurer, Peter Costello, have just made a whole lot more money to repay part of what remains of Commonwealth Government debt.
The Southern Cross Consortium, led by Macquarie Bank, is the successful bidder for the airport and the purchase price is a fraction less than $5.6 billion.
The amount exceeded most expectations, it has led the Labor Party to call for some of the cash to be spent on new investment and it has led the Government to refocus its privatisation campaign on Telstra.
IAN HENDERSON: Canberra Airport and the airports of five state capitals, were privatised during the past five years. Those sales yield a total of $3.8 billion to the Federal Government. But on Monday, the Southern Cross Consortium, in which Macquarie Bank manages 53 per cent of the funds, will hand over a cheque for $5.396 billion in exchange for one, the biggest and the most important of the nations airports, Sydney. A further $192 million to buy the Ansett terminal at Sydney Airport as well.
Macquarie Bank CEO, Allan Moss, told a press conference in Sydney this afternoon, that he and his colleagues in the consortium believe the purchase is good business.
ALLAN MOSS: We feel that the price is a very satisfactory price and as you'll hear from my colleagues, compares very well with alternative, with other airport purchasers and with alternative investments.
IAN HENDERSON: Allan Moss says, expected earnings from the project, of 14.3 times the price being paid and that he says makes it almost as good a prospect as toll roads and better than investments in things like retail property trusts and the Sydney central business district. Even so, the total amount involved surprised most outsiders, that have been tipping a figure in the range 4-5 billion dollars, rather than $5.6 billion. Finance Minister, Nick Minchin, the Ministry in charge of the Howard Government's privatisation program, says the proceeds will go to help pay off public sector debt.
NICK MINCHIN: Consistent with out long-standing policy, we will use all the proceeds, all the net proceeds from this sale, to reduce Commonwealth Government debt. We have reduced that debt by some $61 billion since we came into office. As you know, we were left with a huge mountain of debt and the net $4.2 billion that we will receive from the sale of the airport will all go to further debt reduction and that will save tax payers some $250 million a year in interest payments they'd otherwise have to make on the outstanding debts.
IAN HENDERSON: And Nick Minchin says, it's now time to look forward to the sale of the second half of Telstra.
NICK MINCHIN: The um, the big remaining issue is the 50 per cent of Telstra that the Government still owns.
IAN HENDERSON: Labor's transport spokesman, Martin Ferguson, says the Federal Opposition supports the sale of the airport. He claims it represents the end point, the privatisation plans of former Labor governments. But Martin Ferguson says at least some of the $5.6 billion should be spent on new transport infrastructure.
MARTIN FERGUSON: Now a question of the Howard Government actually using its windfall from the sale of Sydney Airport, to actually do something about investment in the future. Sydney Airport was payed for over many years by our parents and grandparents. They were actually prepared to invest in our infrastructure. But the proceeds of the sale should therefore be correctly used to assist in retiring debt, but also to make a very strategic investment in our future.
IAN HENDERSON: While there are some analysts who think Southern Cross is paying too much for its acquisition, Macquarie Bank and its partners are confident that the investment will pay-off. One way they plan to meet their target, of a 20 per cent return on funds invested in the project, if they take advantage of what they see as a coming burden in international travel. Part of the spin-off is expected to come from more passenger flights. But another part is likely to come from an expanded retail sector at the airport itself. But while individual investors will be able to get part of the action indirectly, there are no plans to list the Consortium on the Stock Exchange at present. Why would that be part of the plan, with the market in its current weak condition.
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