NZ stocks: Tranz Rail avoids punishment as market ends flat

5.50pm

The New Zealand sharemarket ended flat today, as rail operator Tranz Rail shares resumed trading with fairly minor punishment.

The NZSE-40 capital index closed up 0.71 points, or 0.04 per cent, at 1948.79, while the top-10 index was down 0.01 per cent at 877.57.

Stephen Wright of ASB Securities said the market saw reasonable turnover today with 29.84 million stocks traded, valued at $80.96 million, led by Telecom's $33.65 million.

"The market was flat, with Telecom still drifting down unfortunately," Mr Wright said.

Telecom closed down 2c at 462 while Sky City, which goes ex a 20c dividend on Monday, drifted off 2c to 792.

"You often see with Sky when it goes ex-dividend, it loses a bit more than the dividend initially because it always has a run up before," he said.

"Some people are just selling now in anticipation of that."

Pay TV operator Sky Network TV was also weaker on largely institutional selling, closing down 4c at 326 while its majority owner Independent Newspapers Ltd was up 6c at 299.

"(Sky TV's) fundamentals are all widely known, that the company's going to be cash-flow positive next year and will be in profit by the end of the calendar year next year.

"It's been going 11 years so it's taken a little while, but it's finally getting there."

When trading resumed in rail operator Tranz Rail today it hit an intraday low of 122, but shares closed down only 3c at 125.

Trade had been suspended since yesterday morning while the national rail and ferry operator wrangled with one of its bankers over a complex refinancing deal.

Citibank threatened to derail the deal due to a disagreement over a foreign currency hedging deal linked to inter-island ferry Aratere.

The dispute was settled late last night, which gives the green light to a $66 million rights issue to raise money to pay off debt and provide extra security to the United States owners of the Aratere.

The books close on the rights issue today and the rights become tradeable on Monday.

"They made a bit of money out of reversing that hedge contract, but the market was pleased they had renegotiated their lending all right and the stock was going to stay in existence," Mr Wright said.

"They'll still face some pressure during rights trading -- inevitably when you have a reasonable cash issue there will be price pressure. There is a possibility the share price could still go close to that 75c, which is the application money in the cash issue."

Elsewhere on the market, Baycorp Advantage was down 7c at 226, Briscoe Group was up 4c at 254, Carter Holt Harvey rose 1c to 169, Powerco lost 1c to 162 and Auckland International Airport was down 1c at 536.

Among the smaller stocks, carpet-maker Cavalier was up 29c at 799 while technology company Advantage rose 1c to 33 after telling its annual meeting it expected a break-even result for the first half, followed by a modest pick-up in the second half.

Newly listed Botry Zen was up 5c at 21, Turners Auction gained 10c to a record 260, plastics manufacturer Vertex was up 1c at 134, and Skellmax lost 1c to 101.

Contact Energy was unchanged at 387 today after improving 14c yesterday, following its better than expected $107 million annual profit.

There were 50 rises and 45 falls on the 135 stocks traded.

On Wall St, the Dow Jones industrial average shot up 225 points, or 2.6 per cent, to 8848, and the Nasdaq Composite Index gained 48 points, or 3.4 per cent, to 1468.

- NZPA