NZ stocks: Telecom parcel rocks market

Heavyweight Telecom shed nearly 5 per cent and sent the sharemarket down more than 2 per cent yesterday after it placed 91 million shares at a deep discount.

"It was an ugly day and the catalyst was the placement in Telecom," said Forsyth Barr Frater Williams executive director Don Turkington.

"It rocked the market and took liquidity from institutions."

He said that despite the large amount of takeover activity, which intensified yesterday with the PPCS bid for Richmond, the market had been quiet. He expected it to take some time to absorb the Telecom issue.

Telecom, led by chief executive Theresa Gattung, placed the shares at $5.60 each compared with its closing price on Tuesday of $5.92. The stock closed down 31c at $5.61. There had been rumours of the placement for some time when Telecom's price was above $6.00 and, based on that price, the discount was severe.

The NZSE-40 capital index plunged 43.90 points to 2045.75 on hefty turnover of 54 million shares valued at $150.7 million.

Selling was across the board with 75 falls against 33 rises among the 151 stocks traded.

The selling rubbed off on others such at Fletcher Building, down 6c to $2.34, Sky City 30c to $9.80, INL 14c to $3.60 and The Warehouse 6c to $5.50.

Tower lost 35c to $5.55 after posting a flat first half result. Dr Turkington said further talk of a head office transfer to Australia had unsettled investors because of the implications for imputation credits.

DB was another to suffer after its half-year result. The Heineken-owned brewer announced earnings before interest and tax of $20.4 million, up 6 per cent on a continuing operations basis. But its shares price dived 17c to $5.33. However, brokers said the miniscule turnover of 538 shares was not indicative.

Richmond jumped 21c to $2.81 on light turnover of 44,000 shares after the South Island meat company PPCS said it intended to acquire up to 60 per cent of the Hawkes Bay meat processor at prices ranging from $2.70 to $3.24.

Air NZ's freely held B shares held steady at $1.43 after chief executive Gary Toomey said the airline was not strapped for cash and had not sought money from the Government, although there had been internal company debate on the subject. The A shares gained 1c to $1.01.

Contact Energy gained 2c to $2.88 on turnover of 5.7 million shares worth $17.8 million. Cornerstone shareholder Edison Mission was in the market again at $3.10 after failing to complete its stand on Tuesday, reportedly due to counting problems. Nearly all yesterday's turnover was at $3.10.

- NZPA