KEY POINTS:
With no fresh casualties, it's been a quiet week on the finance company front, publicly at least.
Behind the scenes, Stock Takes hears many firms, particularly some of the mid- and smaller-sized ones, are in discussions with a range of alternative sources of funding as debenture reinvestment and new money flows continue at a trickle.
A finance company insider says the big banks, while interested in opportunities presented by the current shakeout, are largely happy to sit on the sidelines for a few more months while the dust settles.
However, at least some of the cash-strapped finance companies are talking to overseas players, who are apparently looking to drive hard bargains.
Whatever happens, it looks likely that once the current troubles are behind us, a larger chunk of the sector will be either foreign-owned or funded, with profits and interest that once accrued to New Zealanders further swelling the river of cash flowing out of the country to overseas financiers.
Pulling punchlines
The High Court appeal against the Commerce Commission's decision blocking a takeover of The Warehouse by supermarket incumbents Foodstuffs and Woolworths promised a fascinating glimpse into the workings of New Zealand's virtual duopoly grocery market.
But the mix of competition law, esoteric economic models and legal jargon could easily divert one from the fact that decisions made here will have some effect on the cost of filling the shopping trolley.
Unfortunately, the juicy parts, which would otherwise make sitting through the rest of the hearing in Wellington worthwhile, have been deemed commercially sensitive and are therefore off limits to the media and the public.
As Woolworths' lawyer David Goddard, QC, told the court on Tuesday: "All my punchlines are secret."
Foodstuffs lawyer Iain Thain indicated he would have preferred the entire hearing to be closed.
He had to settle for just "all the interesting bits" being heard in closed sessions.
The public versions of the various parties' submissions make for a challenge in attempting to work out, by the shape of the holes that have been left, what has been excised.
Stock Takes assumes some of this is about the extent to which The Warehouse's three Extra stores, which combine The Warehouse's usual general merchandise with groceries, have impacted on the business of Foodstuffs' and Woolworths' nearby supermarkets.
The Warehouse's plans for further Extra stores, which were put on hold a month or two ago, will also be a key issue.
Warehouse chief executive Ian Morrice will give evidence today on that subject, again in closed session.
That information would have been interesting for the investing public and useful for Foodstuffs and Woolworths, but even their lawyers have had to sign confidentiality agreements which prevent them from passing on information disclosed during the proceedings to their clients. Warehouse shares closed yesterday at $5.66.
Streaking ahead
Rakon continues its reign as the sharemarket's darling.
Its shares have risen from $4.80 on October 12 to close yesterday at $5.35, up 14c.
First NZ Capital analyst Jason Familton said yesterday's gains were on the back of results from personal navigation device (PND) manufacturer TomTom, one of Rakon's customers.
"It was a very good result and they increased their guidance for the full year."
"Running up to that, people are probably a bit more bullish regarding the general GPS/PND market."
Familton admits he is somewhat surprised by the extent to which enthusiasm for Rakon's prospects has even offset the impact of the strong local currency.
Bid stranded
Masthead Portfolios' $3.85-a-share bid for control of vigorously growing clinical services firm Abano appears stranded by an independent report that values the company at between $5 and $5.80 a share.
Ferrier Hodgson's report is backed up by recent research notes from Forsyth Barr, which values the company at $5.65 a share, and ABN AMRO Craigs, which has a target price of $5.18 on the stock.
Masthead has now extended its offer by a further 20 days but has not raised it, leaving market watchers scratching their heads.
A Masthead spokesman said the extension was about keeping the firm's options open.
In the market, one view is that Masthead is trying a classic old Sir Ron Brierley trick of launching a takeover bid in the hope of encouraging a counter-offer which would be accepted in short order.
Abano's board has been talking up the prospects of another offer, saying this week that two other parties had signed due dilligence agreements and others had also shown interest.
Names thrown up by the rumour mill include Australia's LifeHealthcare, which already has some interests in New Zealand. LifeHealthcare, it is said, has sniffed around Abano in the past and reputedly has links with Australian private equity outfit Crescent Capital Partners.
In any case, Masthead is in a win-win position. Should an offer materialise at, say, the $5.40 mid-point of Ferrier Hodgson's valuation, it stands to make a handsome return on its initial investment.
Masthead acquired its existing 19.9 per cent stake late last year for $7 million; a $5.40 offer would see it pocket a $16.5 million profit. You have to wonder how Eric Watson feels about all of this.
His Cullen Investments got $1.55 a share for its 10 per cent Abano stake from Masthead a year ago. That stake has almost trebled in value. Shares closed yesterday at $4.80.
Flying too high
Tower Australia, still a widely held stock among New Zealand retail investors after its split from parent Tower NZ a year ago, received a boost from market share figures and analyst research last month.
The stock traded as high as A$3.25 immediately after the split, largely due to investor confusion about the mechanics of the transaction and what Tower said was an ASX balls-up.
"It never should have gone as high as it did," chief executive Jim Minto says.
It later slumped as low as A$1.92 but traded up towards the A$2.50 mark last month on data showing the business was growing well relative to competitors. It closed yesterday at A$2.33.
"Investors can see the business is tracking along very well. They liked what they saw and re-rated the stock up to that level," said Minto.
"We've since had some market corrections, but it's fairly stable today."
Credit Suisse analyst Arjan van Veen noted Tower Australia's growth of 3.8 per cent over the June quarter, or 16.2 per cent annualised, was well ahead of the market's 2.4 per cent and in excess of Credit Suisse's own forecasts of 11-12 per cent a year.
Van Veen has a 12-month price target of A$3.75 a share.
The company's shares also benefited from an upgrade early this month from Morgan Stanley.
Meanwhile, Tower Australia's chairman since the split, former James Hardie Industries chief executive Keith Barton, stepped down last month after less than a year in the job.
The 67-year old has been replaced by Rob Thomas, who was previously chief executive and then chairman of Citigroup Australia and New Zealand.
Tower Australia reports its maiden annual result late next month.
Making a point
Shareholders Association chairman Bruce Sheppard donned his infamous Viking horns as he attempted to present the ANZ bank with an award for bad behaviour yesterday.
The ANZ earned the annual Golden Glob award for its refusal to provide the Feltex liquidator with documents which the association believes may be important in its ongoing fight to get compensation for shareholders.
Stay tuned for part two next week when the association announces its Beacon award for excellence.
