DNZ announces freeze on share trading

Shares in the $746 million DNZ Property Fund are in a trading halt.

Simon Curtis, DNZ general manager for marketing, announced the freeze and blamed it partly on media coverage about the business planning to list on the NZX.

It was at DNZ's own annual meeting last month that the issue of listing was raised and aired in a scrap between DNZ directors and MMG Advisory Partners (formerly Money Managers) whose clients are DNZ investors.

DNZ was originally closely connected to Money Managers.

The fight centred on a proposal to amend the constitution ready for listing. Most investors backed the changes but DNZ's management business voted it down.

Curtis said investors might not like the indefinite halt but said it was inevitable. "There is currently speculation in the media and elsewhere as to the intentions of DNZ Property Fund regarding a possible listing on the NZ Stock Exchange. As has been communicated, Goldman Sachs JBWere is currently undertaking a review of the fund's capital management strategy.

"In the circumstances, in particular to reduce the risk of trades occurring while the market is not fully informed, the board considers it prudent that a trading halt be placed on the fund's shares quoted on the unlisted private market facility until such time as the board is able to disclose to the market and shareholders the results of its capital management review," he said.

The trading halt was indefinite.

"The board understands this may inconvenience some shareholders but it believes that this is an appropriate action to take," Curtis said.

Investors watching the situation closely said a listing was unlikely because DNZ, formerly Dominion Funds, would need more time to prepare and required waivers from the NZX to comply with listing regulations. Instead, a capital-raising scheme was far more likely, they predicted.

DNZ needs the cash because it is the most highly-geared large real estate business trading in New Zealand.

Paul Duffy, chief executive of DNZ Property Group which manages the big real estate business, told the annual meeting on September 15 that DNZ was heavily indebted and needed to increase liquidity and spark more interest in the stock which had last month been trading on unlisted at only about 45c a share.

That meant the business had a market capitalisation of just $200 million - a huge discount on the net tangible assets valued at $746 million.

PORTFOLIO
DNZ's properties include:

* Johnsonville Shopping Centre.
* Meridian Energy building, Wellington.
* ASB building, Albany.
* Shops at Wairau Park, North Shore.

Duffy said DNZ's loan-to-value ratio was higher than any of the large listed property businesses at 48.4 per cent. He wants to reduce it to "sub-40" per cent.