Stock takes: Life after death

We might have referred to it as a "Terminal Case" in a fact box when the Business Herald reported on the ProvencoCadmus receivership last week, but there is still life left in the company.

While cornerstone shareholder Peter Maire had little to add to what has already been said when Stock Takes contacted him this week, he did echo chairman Rick Christie's sentiments, saying "underneath it all there's a good company there".

The way Stock Takes hears it, Maire had been fairly vigorous in pushing for the merger of Provenco and Cadmus but the other major shareholder, Todd Capital, had been less enthusiastic.

Obviously the merger went ahead eventually, but some would argue that it was too late. Beyond that, we hear Maire and Todd Capital were unable to agree on what shape a badly needed capital raising should take.

The question now, one market commentator pointed out, was who is going to be in a position to take up the remnants of the business and run with it.

Asked whether he had any intention of doing anything further with the company, Maire said he was continuing to work with receiver Michael Stiassny and the bank which now owns the business.

"I don't know where this will lead to but I'm just doing my best to help them to make sure jobs get preserved and the company continues to operate, that's the top of my list."

Todd Capital last week refused to comment, and if they have any intention of picking up any of the company's businesses, as some speculation has it, Maire says he is unaware of it.

"I really don't know what their thinking is. Let's hope that something emerges quickly," he said.

BOUNCING BACK

Quite a few of the local market's listed property trusts have been on the rise for the past month or so.

Aside from the general market recovery, one of Stock Takes' sources reckons this has something to do with a tailing off in the amount of higher yielding corporate issues which were so prevalent just a few months ago.

That is forcing investors into the market looking for yield and even after rises in unit prices many of the trusts are still offering good ones, especially given their PIE status and the tax benefit that offers.

Those which have risen substantially include Goodman Property Trust which at current pricing still offers a yield of 12.4 per cent. ING Property Trust's current yield is 12.27 per cent, AMP NZ Office Trust offers 9.8 per cent and Kiwi Income Property Trust is offering 9.2 per cent.

Okay, most of the recent gains are in line or actually slightly less than the overall market, but go back a bit further and the sector looks like a standout.

In the last month the NZ property gross index rose 10 per cent, while the broader NZX-50 is up 14 per cent.

Go back three months to mid-May and the property gross index is up almost 16 per cent while the NZX-50 is up 11 per cent. That might simply indicate the sector was more deeply discounted than the wider market during the bust, but go back a year and the property index is now down 3.8 per cent and the NZX-50 down 6.6 per cent.

UNSAVOURY BEHAVIOUR

Chow time at property unit trust meetings has seen unseemly behaviour from octogenarians in Auckland lately, the Business Herald has observed.

"Women and children first, right?" quipped one fed-up female unitholder at Goodman Property Trust's AGM last week at the flash Stamford Plaza.

Her beef was the forward pack of burly old blokes lined up feeding from the hot savoury table. A second row of elderly women had formed behind them, eagerly trying to even see what was on offer.

The food scrum, it seems, is more interesting than the meetings.

National Property Trust's AGM out at the less salubrious Ellerslie racecourse venue saw more basic food on offer.

"We've done our money with this mob, might as well at least get a sandwich out of them," one unitholder said.

DIRTY POOL

Transpacific Industries offered Waste Management investors a number of unguents when it took over, sorry, merged with the company back in 2006, not least of all a good price for their shares.

Transpacific also garnished its offer with rhetoric around how they intended to look after New Zealand investors by listing on the NZX to give them an easier ongoing option to continue their investment in the business and sector. They were as good as their word, establishing a secondary listing here.

However, despite regulatory changes which make it easier for Australian companies to extend share issues to New Zealand investors, Transpacific, which has been forced to go to investors to raise A$800 million, for some reason has seen fit to exclude local retail investors from its entitlement offer, a move one local broker labelled "dirty pool".

As it happens, Transpacific's New Zealand mum and dad investors are not missing out on much. The offer is priced at A$1.20 a share. Yesterday afternoon, the company's existing shares closed at A$1.15

THE RABBIT HOLE

NZX's AXE ECN venture seemed like a clever and bold play when it was unveiled more than two years ago.

While the bid to establish a small but high-speed and low-cost equities trading platform to steal some business off the ASX was always a bit of a David and Goliath scenario, the fact that NZX's partners included a string of top investment banks lent the proposition considerable credibility.

But AXE ECN has struggled to gain a crucial market licence. It wasn't too much of a surprise then when NZX a week ago said it had taken a $1.8 million provision against the stalled business.

Asked whether that reflected an increasing view at NZX that the business was never going to get off the ground, chief executive Mark Weldon wasn't going that far, but his response was certainly tinged with rancour.

"Without question a 29-month cone of silence makes you feel like you're in a labyrinth and I think that's the only fair, reasonable and balanced way to describe the Australian Government and it's not one that's particularly welcoming to New Zealand investors, it turns out.

"Those are just the facts and those have been recognised in the balance sheet treatment and then we will see what, if anything, does emerge out of the other side of the tunnel in Australia."

THE SHAPE OF THINGS TO COME

Business Herald staffers have been struck by the range of different shaped economic recoveries posited by pundits.

ANZ economists, in their Weekly Focus newsletter published on Monday, said they were now formally shifting to a more explicit "W" shape for the economic cycle, from the "bathtub with waves" shape they expected previously.

Westpac markets strategist Imre Speizer noted early this month that some indicators were pointing to a "V" shaped recovery for the US, "a phenomenon previously considered most unlikely".

Meanwhile, Richard Snook, senior economist at the Centre for Economic and Business Research said in the Observer: "This is a saxophone-shaped recession. The long neck represents the sharp fall in output over the last year, then a gentle recovery that falls far short from where we started."

Nike said in June it was betting on a "swoosh-shaped" global economic recovery and that the athletic shoe and clothing maker was poised to benefit as the gradual rebound begins.

Going back to March this year, Kurt Karl, chief US economist at reinsurer Swiss Re in New York said: "This is a slow 'U'-shape recession."

Diverse as the predictions are, they all paint a far more positive picture than the "L" shape spoken about in the early stages of the downturn.