Market close: Eroad’s discounted capital raise met with weak take-up

Eroad’s discounted capital raise hasn't been taken up in huge numbers. Its share price ended the day flat at 70 cents.

New Zealand’s benchmark share index slid downwards on Tuesday, during a lull in company news as investors pressed pause mode before the election.

The S&P/NZX 50 Index fell 34 points, or 0.3 per cent, to 11,342.87. Turnover was a light $73.8 million and there were 51 gainers and 75 decliners on the main board.

Grant Davies, an investment adviser at Hamilton Hindin Greene said the market was quiet due to little company news, election uncertainty, and a lull in international monetary or market-moving news, compared to last week.

In company news, existing shareholders have taken up only 26.9 per cent of Eroad’s discounted capital raising, generating $5.6m.

The transport software and hardware firm aimed to secure $50m at 70 cents per share, with $11.6m from institutional placements and the rest from shareholders via a 1 for 2.06 entitlement offering.

Davies said the retail offer hadn’t been taken up in huge numbers.

The institutional placement raised $11.6m, while the entitlement offering only garnered $4.3m, prompting a bookbuild at 70 cents per share to raise the remaining $13.3m. Eroad plans to sell 21.7 million shares in a retail shortfall bookbuild to obtain the remaining $15.2m. The company was flat at 70 cents per share by the end of the day.

Air New Zealand has decided not to provide earnings guidance for the current financial year due to numerous uncertainties, releasing the news ahead of its annual meeting today.

Chair Therese Walsh cited softening corporate and domestic demand recently, while international markets remained steady.

Factors affecting the airline’s demand and profitability include increased international competition, volatile fuel prices, a weaker Kiwi dollar, rising wages and higher airport charges.

The airline is closely monitoring oil prices, currency exchange rates, passenger demand and global engine issues. Walsh acknowledged the strong recovery in the previous fiscal year but noted the current period’s unpredictability.

The company has made adjustments to its capital structure, with changes to gearing targets and distribution policies.

Air New Zealand shares fell 1.5 cents or 0.7 per cent to 74 cents amid a subdued S&P/NZX 50 Index opening.

At the airline’s annual meeting in Wellington today, Air New Zealand said it was on the verge of finalising a lease agreement for an extra Boeing 777-300 aircraft.

Cooks Coffee, the franchise holder for Esquires, is shutting down its Triple Two coffee franchise, which initially comprised 13 cafes across the UK. The acquisition, valued at $7.5m in Cooks Coffee shares, was made in 2020.

Despite prior growth and momentum, recent challenges, likely exacerbated by the pandemic, have led to the closure of 11 cafes.

The company’s annual meeting was held in Auckland today. The shares were flat at 18.5 cents by end of trading.

Hallenstein Glasson Holdings was down 1 cent or 0.2 per cent to $5.80. Wealth investment firm Forsyth Barr said the retailer’s result is unlikely to surprise.

The retailer is releasing its full-year results on Friday and Forsyth Barr analysts Margaret Bei and Andy Bowley said they anticipated net profit after tax of $32m, in contrast to a guidance range of $31.8m to $32.3m.

“The key focus will be on any outlook comments for HLG given the retail sector continues to face a challenging macroeconomic backdrop,” they wrote in an earnings preview.

The NZ dollar was trading at 59.65 US cents at 3pm in Wellington, up from 59.61 on Monday. The trade-weighted index was at 70.67, from 70.43 on Monday.