NZ stocks: Tranz Rail, tower dominate quiet day

The New Zealand sharemarket drifted lower today in a restrained day's trading, while most eyes were on the latest developments in the Tranz Rail and Tower Group stories.

The benchmark NZSX-50 gross index fell 0.471 per cent to 2171.25 by the market's 5pm close, while the NZSX-40 capital index dropped 0.5 per cent to 2107.57.

Turnover was $46.87 million on 17.09 million shares traded on what ABN Amro Craigs Equities retail adviser Bryon Burke described as an "overall quiet but weak day".

Mr Burke said there was little to say about the day on a stock- specific basis except for Tranz Rail and Tower Group, " the main two that I've commented on every day for the last two weeks".

The tussle for control of cash-strapped national rail operator Tranz Rail looked close to an end when the Government announced this afternoon it had come to an agreement with rival bidder Australia's Toll Holdings.

The new deal will see Toll make a fresh offer for the company at 95c a share conditional on 90 per cent acceptance, but it also duplicates the Government's earlier $226 million bailout proposal.

The Government will still buy the track network for $1 plus $50 million for track leases. But it will not now fork out $76 million for a 35 per cent stake in the company.

Today Tranz Rail shares closed 3c lower at 93. Mr Burke said this probably reflected the market deciding "that's it" and the affair was nearing its conclusion.

" This will probably be the deal that will succeed," he said.

Meanwhile troubled insurer Tower Group received the go-ahead from the stock exchange's watchdog for a capital-raising package underwritten by corporate raider Guinness Peat Group (GPG).

NZX's Market Surveillance Panel (MSP) today said it had granted GPG, which owns 9.9 per cent of Tower, a waiver from its listing rule requiring shareholder approval for a related party transaction.

Tower shares rose 14c to 167 today.

"I'm not sure why it went up," Mr Burke said. "But obviously (investors) liked the fact that GPG was still going to be in there."

The MSP's ruling allows GPG to underwrite a four-for-three rights rights issue at 90c a share and is likely to see it lift its stake in Tower to 13.75 per cent.

Tower needs the $210.8 million from the capital raising to shore up its financial position and reduce debt.

Elsewhere on the market Mr Burke said there was some profit taking in evidence in some stocks.

"But low order flow meant the prices came back on not many trades."

Market leader Telecom lost a cent to 512, Contact Energy was down 5c to 490, and Carter Holt Harvey eased 2c to 175.

Stocks to rise today included: Cavalier up 4c to 475, Dorchester Pacific Group up 3c to 163, Mainfreight up 3c to 142, NZX up 20c to 470, Ports of Auckland up 6c to 766, Steel & Tube up 4c to 365, and Telstra up 3c to 510.

Stocks to fall included : Auckland Airport down 10c to 590, Briscoe down 2c to 198, Fisher & Paykel Appliances down 20c to 1295, Fisher & Paykel Healthcare down 10c to 1190, Genesis down 5c to 119, Sky City down 13c to 920, Sky TV down 4c to 458, the Warehouse down 3c to 490, and Westfield down 9c to 392.

There were 33 rises and 50 falls on 135 stocks traded.

- NZPA