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SYDNEY : The Australian government will not intervene in a private equity group's bid for national airline Qantas despite concerns that the 11.1 billion dollar (8.8 billion US) deal amounts to a foreign takeover, Prime Minister John Howard said Monday.
Howard said the government would ensure the deal met Australian law regarding foreign ownership but could not ultimately influence whether shareholders sold their stocks in the flying kangaroo.
The airline's board has unanimously backed an offer from Australia's Macquarie Bank-led consortium, Airline Partners Australia, of 5.60 dollars per share.
The consortium, which includes US private equity giant Texas Pacific Group, Canadian investor Onex and Australia's Allco Finance Group and Allco Equity Partners, believes it meets the foreign ownership conditions of Australian law. It has submitted the deal to the Foreign Investment Review Board which will determine whether Australian shareholders hold at least 51 percent of the company as stipulated under the Qantas Sale Act.
Howard is under pressure to use the foreign investment rules to impose conditions on how the airline is run amid fears the deal will lead to cuts to jobs and regional services.
But he said the government would face a savage backlash from the business community if it attempted to intervene in the sale.
"The point I have made repeatedly is that in the end you can't have a situation where the government decides whether or not people who own shares in a particular company can sell those shares," Howard told Nine Network television.
"Once you go down that path, then I think you begin to alter in a quite major way that nature of the economy that we operate in.
"We cannot have governments deciding which shares can be sold and which can't and in the end that is what some people are advocating."
The prime minister also ruled out seeking to cut the deal's heavy debt levels.
Treasurer Peter Costello, who has the power to block the sale if it does not meet the national interest, has said the Qantas board should be concerned about the 70 percent debt level proposed by the consortium.
But in an interview with The Australian Financial Review, Howard said the government would not interfere in legitimate commercial decisions.
"You set down some rules and people operate within them. I don't believe they should be inappropriately used -- they are foreign investment rules, they are not company management or company gearing-ratio rules," he said.
- AFP/ir
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