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Equity trusts unsuitable vehicle: Moore

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The latest concept put forward by Senator Evans of an airline "equity trust" to satisfy the capital requirements of both Qantas and Australian Airlines is not commercially viable, according to John Moore Opposition spokesman for Business and Consumer Affairs.

"Under such a plan investors would gain access to a revenue stream with final operating control of the airlines retained by the Government. .

"Senator Evans said the proposed equity trusts would vest voting shares and a direct percentage shareholding in either airline. Furthermore the Australian Industry Development Corporation would be

appointed as the trustee holding the shares.

"This type of deal would be rejected by the market especially in light of the recent failure of the Victorian Equity Trust.

"This investment which sought to raise $500 million was reportedly $120 million under-subscribed with only some $20 million subscribed by personal investors. The remainder was predominantly taken up

by other Victorian State Government enterprises.

"Apart from lacking investor acceptance the "equity" raising would, consistent with the treatment of the Victorian Equity Trust be regarded by the Treasurer as debt.

"Accordingly the Opposition considers the proposal is flawed due to probable lack of investor interest, control of enterprises remaining with Government, and the economic implications of increasing the level of Government indebtedness.

"The compromise put forward by Senator Evans falls a long way short of the advantages offered by the 100% sale of Australian Airlines and Qantas by public flotation, it is only through this method that all Australians will be able to participate as investors along with the employees of the two airlines.

23 MAY 1988