Gaynor: Trans Tasman's cheeky number

By BRIAN GAYNOR

Cheeky, extremely cheeky, is the kindest comment one can make about the Trans Tasman Properties recapitalisation.

Effectively, it is a takeover bid by Sea Holdings - which now owns 54.8 per cent - but Trans Tasman is financing the deal.

Under the proposed scheme, shares and notes owned by minority shareholders will convert into secured bonds issued by Trans Tasman. This will leave Hong Kong-based Sea with 100 per cent ownership.

Ordinary shareholders will receive 35c worth of bonds for every one share. The bonds will pay 10 per cent interest a year and convert into cash in June 2011.

In other words, ordinary shareholders are being offered 35c cash - to be paid in 10 years - for a company that had a book asset backing of 73.9c per share on June 30 last year.

This is a win-win proposal for Sea Holdings but Trans Tasman's ordinary shareholders don't get paid until 2011.

These minorities have been battered and bruised by the group's dismal performance but they should have enough fight left to oppose the lopsided proposal.

New Zealand Stock Exchange


There should be plenty of red faces at the New Zealand Stock Exchange later today when the Australian Stock Exchange releases its interim result.

The ASX is a vibrant and progressive organisation that produced a net profit of $A53.6 million for the June 2000 year. This was after a $29.7m tax provision.

By contrast, the NZSE reported a net profit of just $1 million for the same period after a nil tax provision.

The dismal profit performance of the local exchange is probably one reason the ASX pulled the plug on the proposed merger.

The NZSE suggests it might list after demutualisation. Based on last year's earnings and the ASX's price/earnings ratio, our exchange would have a market value of approximately $26m - not much for an organisation that has been around for more than a century.

A listing would open the exchange to full market scrutiny and encourage members to get off their butts and demand a better performance from directors and senior management.

Wilson Neill


Wilson Neill's directors have been talking about a full board listing but the company's disclosure standards are still in the dark ages.

In Dunedin next Tuesday, shareholders will be asked to approve the acquisition of IT Media at a cost of 250.4 million new Wilson Neill shares, and the issue of 19.5 million shares last year to a former director at 9.2c per share.

There is no historical information on IT Media, the owners of FlyingPig.co.nz and publishers of NZ Rugby World, NZ Fishing World and new business weekly NZ Business Times.

The notice of meeting reports that IT Media is forecasting earnings before interest, tax, depreciation and amortisation in the range of $1.8 million to $2.5 million for the March 2002 year but it is difficult to know whether this is realistic.

No one at the company would name the former director who was issued 19.5 million shares last year, although it is understood to be Paul Hyslop.

Investors should always be wary of companies with poor disclosure standards, particularly when they are not listed and not subject to insider trading rules.

Directors' Disclosure


In Australia, directors are required to disclose share dealings within 14 days, whereas in this country directors' share transactions are disclosed only in the annual report.

Under proposed changes to the ASX's listing rules from July 1, directors will have to report a change in holdings within two days.

When will our disclosure requirements be brought into line with this widely accepted modern practice?

* bgaynor@xtra.co.nz

Midweek serving of top analysis


He is New Zealand's most widely read business columnist, and we're giving you even more of him.

From today, Brian Gaynor begins a mid-week column, complementing his hard-hitting weekend analysis with a wide-ranging look at corporate New Zealand.

Look out for Gaynor's column, every Wednesday in the business section of the Herald Online.