NZ stocks: Tranz Rail dominates trading

12.00pm

All eyes were on Tranz Rail on the stock market today as buyers snapped up its shares following the Government's offer of a financial lifeline last week.

By 11.30am $6.6 million of Tranz Rail had been traded on a volume of 6.9 million, causing its share price to surge in an otherwise flat market today.

Tranz Rail was trading up 13c, or 16.25 per cent, at 93 at 11.30am, having reached a high earlier this morning of 102, up 25 per cent.

More than two million Tranz Rail shares changed hands as soon as the sharemarket opened.

The shares were at 80c before a trading halt was placed on them on Friday afternoon, before Finance Minister Michael Cullen announced the rescue package.

The Government and Tranz Rail have signed a heads of agreement, which includes the Government paying $76 million for a 35 per cent share of the rail operator through a rights issue at 67c a share.

It would also inject $44 million immediately, buy the national rail network for $1, pay $50 million for associated assets and spend $100 million over five years on network maintenance.

Macquarie Equities broker David Cleal said the rally in trading of Tranz Rail was linked to the Government's offer of a rescue plan.

"The company is not going to go broke and that's been the concern in the market's mind for a little while, so it means that they're going to be able to dispose of assets in an orderly way," he told NZPA today.

"A lot of uncertainties have been taken out of the market I suppose.

"Toll have said that they are not buying any more stock, but obviously their position would be more secure if they had 20 per cent rather than the current 10 per cent."

Tranz Rail shares are under offer at 75c a share from Australian logistics group Toll Holdings which owns a 10.1 per cent stake in the rail operator.

Macquarie was advising Tranz Rail and was not allowed to comment more specifically, Mr Cleal told NZPA.

Forsyth Barr broker David Price there had been a lot of retail players in Tranz Rail trading so far.

"It's quite a strong rally on the fact that they're not going to go to the wall," he told NZPA.

"There was some aggressive buying on the open which has now disappeared and there has been a lot of retail players in it since it traded down to the lows of 30c some six weeks ago.

"I think you'll probably see it trade back from here, probably closing lower than it is."

The benchmark NZSX50 gross index dropped 0.95 points to 2107.97 and the NZSX40 capital index fell 1.92 points to 2072.43 at 11.30am.

By 11.30am there had been 41 rises and 33 nfalls among the 120 stocks traded.

Aside from Tranz Rail, Telecom had traded $4.3 million on a volume of 851,635. It shares are up 2c at 507.

So far today the market has seen 12.1 million shares traded for a total of $19.4 million.

Other rises on the market today included NZX up 5c to 425, Genesis Energy up 5c to 130, and Westpac up 5c to 1795.

On the down side were Fisher and Paykel Appliances down 12c to 121288, Pacific Retail shed 8c to 220, F & P Healthcare slipped 25c to 1125, Tower slid 6c to 157, while AMP dropped 9c to 571.

- NZPA