Why is the Air New Zealand share price grounded on Wednesday?

What's going on with Air New Zealand shares today?

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Key points

  • Air New Zealand shares are frozen at 79 cents
  • The company requested a trading halt pending the outcome regarding its shortfall bookbuild
  • Air New Zealand shares are expected to resume trading on or before 5 May

The Air New Zealand Limited (ASX: AIZ) share price won't be going anywhere on Wednesday.

This comes as the company requested that its shares be placed in a trading halt.

As such, the airline operator's shares are frozen at 79 cents apiece.

It's worth noting that Air New Zealand shares have lost more than 30% in value over the past month. You can find out about the details here.

Why is the Air New Zealand share price halted?

Prior to the market opening, the company requested the Air New Zealand share price be halted while it prepares an announcement.

According to the release, the company is planning to make an announcement regarding the outcome of its "shortfall bookbuild of ordinary shares attributable to unexercised rights in its renounceable rights offer".

Air New Zealand has requested the trading halt remains in place until Thursday 5 May or following the release of the announcement, whichever comes first.

Air New Zealand's shortfall bookbuild

While details remain unknown about the pending outcome, we take a look at Air New Zealand's shortfall bookbuild.

The company is conducting a bookbuild of approximately 274 million shares that were not taken up by eligible shareholders under the rights offer.

The price at which new shares will be issued under the shortfall bookbuild is the bookbuild price. This will be determined by Air New Zealand in consultation with the underwriters today. Although, management previously noted that it will be equal to or above the rights offer price of NZ$0.53 per new share.

Any shareholders who applied for additional new shares in the shortfall bookbuild will be allocated shares at the bookbuild price.

For those who did not take up their full entitlements in the rights offer, those shareholders will receive a pro-rata share of any premium between the bookbuild price and the rights offer price.

About the Air New Zealand share price

Since this time last year, Air New Zealand shares have fallen almost 50%.

This has mostly been attributed to its losses in the last couple of months following the company's recapitalisation package.

On valuation grounds, Air New Zealand has a market capitalisation of roughly $887.05 million, with approximately 1.12 billion shares outstanding.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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