USD4.5 billion proposal for Auckland Airport

The Directors of Auckland International Airport Limited (AIAL)

announced a proposed transaction with Dubai Aerospace Enterprise (DAE) which

would see DAE acquire an interest between 51% and 60% in the AIAL business and

become a strategic partner.

Under the proposal, AIAL shareholders will receive value of up to USD3.02 per share. The directors of AIAL have unanimously recommended the proposed transaction. This decision was reached in the absence of a superior proposal.

Chairman of the board of AIAL, John Maasland, said the proposal involves an amalgamation and the establishment of a new company, Auckland Airport Limited, in which DAE would invest up to USD2.1 billion and hold between 51% and 60% of the shares.

DAE is a global aerospace manufacturing and services corporation that is seeking to become a major player in the international aerospace industry.

Shareholders will be asked to vote on the proposal at a meeting in Nov- 07. Under the Merger Implementation Agreement, the AIAL board is not restricted from considering competing proposals from other parties and making a recommendation to shareholders if the Board believes another proposal would provide a better outcome for shareholders. In these circumstances, the board has the ability to terminate the Merger Implementation Agreement after consultation with DAE.

If the proposal is approved by shareholders and completed, AIAL and DAE will enter into a Co-operation Agreement. Under this agreement, DAE confirms its commitment to enhance AIAL's existing business, and working with AIAL to pursue new opportunities beyond the existing airport site.

"We believe DAE will bring additional aviation and tourism development experience to the New Zealand business. This partnership should deliver significant benefits to the company and New Zealand tourism as a whole," said Mr Maasland.

The DAE offer gives AIAL shareholders a range of options to achieve an equivalent value of up to USD3.02 per share. This value represents a premium to shareholders of 55.9% to the average trading price over a one month period prior to 05-May-07, when takeover speculation around the company arose. This represents an Enterprise value for AIAL of USD4.5 billion.

The base proposal is for shareholders to receive USD1.86 cash per share, a new stapled security (share plus loan note) in Auckland Airport Limited plus a final fully imputed dividend from AIAL of USD0.06 per share.

Shareholders can elect a preference to take "more stapled securities and less cash", or "more cash". The final allocation of cash or stapled securities for those shareholders electing out of the base proposal will be on a pro rata basis and will be dependant on the composition of all shareholder elections.

DAE is providing an additional pool of up to USD249.1 million for AIAL shareholders who express a preference to receive more cash and whose preference is not initially met. From this additional cash pool DAE will acquire stapled securities at USD1.11 per security. This increases the ability of those shareholders who elect the "more cash" offer to be satisfied and could see DAE's shareholding increase to a cap of 60%.

Auckland Airport Limited will be listed on the New Zealand and Australian stock exchanges as AIAL is currently. The board will comprise seven directors, three appointed by DAE and four, including an independent chairman, from the existing board.

Bob Johnson, DAE's CEO said that DAE regarded the proposed transaction as a significant development with exciting potential for both parties.

"Auckland Airport Limited will be a cornerstone investment for DAE and as such, will receive our considerable support to continue to successfully develop the business on the global stage," he said.

Mr Maasland said there had been a significant increase in interest in AIAL from a wide range of parties including infrastructure and pension funds in recent months.

"This level of interest is not surprising, given that Auckland International Airport is the only standalone listed asset of its kind in Australasia and is widely recognised as a well managed and highly efficient operation.

The board considered that any proposal needed to not only achieve a premium for shareholders, but to also introduce an industry partner who would further enhance our plans for growth and development".

Mr Maasland said the Board was also keen to see shareholders have the opportunity to continue to participate in the success of the company. Under this proposal with DAE they are able to do so via the establishment of the new airport company.

"We look forward to discussing further detail about the merits of this proposal with shareholders and other stakeholders in the weeks ahead," he said.

To conclude a transaction both AIAL and DAE require confirmation of at least a BBB-/Stable credit rating from Standard and Poor's and confirmation from the independent expert that the transaction is fair and reasonable. AIAL has appointed Grant Samuel & Associates Limited to prepare an independent report on the proposed transaction. A copy of the independent report, the amalgamation proposal, a prospectus and investment statement relating to the stapled securities will be issued to shareholders in Oct-07.

The transaction is subject to 75% AIAL shareholder approval and also requires Overseas Investment Office approval.

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