Air New Zealand receives NZ$900 loan from the government to sustain during this Coronavirus outbreak.
Without this intervention, New Zealand was at risk of not having a national airline.’ said the Finance Minister Grant Robertson and would authorise up to $NZ900 million ($A890 million) loan to the airline over the next two years.
The will allow the airline draw down funds if cash reserves drop below a minimum threshold.
The funding will be in two tranches. The first tranche of NZ$600 million will be at the interest rate to of between 7 and 8% per annum and the second tranche of NZ$300 million will be at the interest rate of 9% per annum. The loan will be available for 24 months. The interest rates for each tranche will increase by 1% if there is still money available after 12 months.
Air New Zealand will be forced to cancel its 2020 interim dividend, and any other dividends or distribution to shareholders while drawing money from the loan.
The government can also seek repayment after six months through a capital raise by the airline or convert the loan to equity.
However, Air New Zealand’s share price slumped by 34 percent as it resumed trading after a four-day halt on Friday.