KEY POINTS:
Hanover's debt restructuring plan, approved by investors, now requires approval from the banks.
Many Hanover debenture holders would have backed the plan on the strength of PricewaterhouseCoopers' report saying it represented a marginally better prospect for them. However, that was assuming management's "optimistic" view on the property market was vindicated.
Stock Takes yesterday found no shortage of investment professionals who believe investors are unlikely to even get back the scant 55c in the dollar in net present value the plan offers.
PWC's John Waller, who worked on the report and reiterated his support of findings in an interview with the Business Herald before the vote, has a solid reputation. He leaves the company at the end of the year to concentrate on his chairmanship of the Bank of New Zealand, and other boardroom roles including one at Fonterra.
Stock Takes hopes, both for the sake of Hanover investors and Waller's reputation, that this sorry saga doesn't yield further instances of the company's owners, board and management failing to meet their obligations to investors, thereby extending their losses.
Unlike Hanover's management, Stock Takes is not optimistic on this count.
Steady on, Bruce
The Shareholders Association's Bruce Sheppard was clearly bitterly disappointed with the outcome of the Hanover vote.
In yesterday's Dominion Post he let fly at Hanover's investors for choosing the restructuring plan over receivership.
Sheppard is somewhat hyperbolic even in relatively calm moments but he wasn't holding back in this instance, labelling them "old dumb wits". He went on to suggest that New Zealanders aged over 60 had low economic value and should be euthanised. Sheesh! As if Hanover investors haven't taken enough knocks lately as it is.
Stock Takes is sure Sheppard's comments were not really a heartfelt call for widespread gerontocide but nevertheless, even if meant partly tongue in cheek, they seem likely to detract from his undeniably worthwhile work as an advocate for "mum and dad" investors.
Whether Sheppard is motivated by a public spiritedness indicative of a deep and abiding love of humankind, or simply by a love of the limelight, he often does a better job of raising the alarm over corporate and financial skulduggery than some of the "official" capital market watchdogs.
He risks undermining his achievements and standing by indulging in histrionics.
Twist my arm
Sharemarket operator NZX has indicated it is likely to accept Johannesburg Stock Exchange's (JSE) revised takeover offer for the Bond Exchange of South Africa (Besa).
NZX bought in to Besa in early October, paying 73.17 rand a share or the equivalent of $5.77 million for 22 per cent of the company.
It deemed JSE's early November 90 rand a share offer as too light but JSE is now back with a bid of 125 rand a share. What's more, the new offer is cash on the barrelhead rather than conditional as the first was.
"NZX will update the market when further information comes available, but anticipates accepting this revised offer following clarification of full and final terms of the deal," it said yesterday.
And why not? NZX will book a profit of around 71 per cent on the deal for a couple of months' ownership.
Is Asia ready to rally?
More than a year after the credit crisis first erupted, the notion that global growth had "decoupled" from the flagging United States economy as rising demand in emerging Asian economies of China and India took up the slack has been blown out of the water.
Aside from numerous reports of softening activity in China, a recent visitor to South China's industrial heartland told Stock Takes of a striking contrast to the last visit. Entire precincts of factories and their attendant dormitory blocks that were bustling a few months before were now exceptionally quiet. The realisation that China's economy remains largely dependent on external markets appears to have sunk in.
That said, in a recent research note Credit Suisse says that while a deep and long recession appears to be priced in to Asian stocks, it believes "a sustainable 30 per cent rally" is a distinct possibility next year.
It identifies three catalysts for this rally - fiscal stimulus, further monetary policy easing by the US Fed and industrial production reaching an identifiable bottom.
Credit Suisse says Chinese stocks and banks are the best way to play this rally. It sets out its "country tilts" indicating how it regards the prospects for the equity markets in Asia Pacific countries and China is on top.
Interestingly, although Credit Suisse is slightly "underweight" on New Zealand, it is more bullish about our prospects than those of Singapore, Taiwan, and even Australia, whose BHP Billiton is the top stock pick for the year.
King takes aim
Brent King has fired yet another broadside at his former company Dorchester Pacific. Dorchester is holed below the waterline but is asking its debenture investors not to scuttle it by calling in the receivers but instead agree to a three-year deferred repayment plan under which they would forgo interest repayments on their $168 million in principal. It has a horribly familiar ring to it.
This week King, who founded and then managed Dorchester for 17 years until 2005, called on investors to reject the plan, saying it nullifies debenture holders' first ranking status.
King goes on to point out a number of alterations to the company's trust deed which will add "some hefty new risks".
"The lending and investment track record of current management has been very poor ... so why should investors assume that this will change when the company resumes business?" he asks.
Mind you, King's own recent investment record has been less than stellar. His Investment Research Group, formerly called Viking Capital, has lost about $5.5 million on its investment in a finance company.
What was it called again? That's right - Dorchester Pacific.
Good riddance 2008
At the fag end of 2008, most investors would be happy to see the back of what has been a year of breathtaking wealth destruction.
On the sharemarket, the NZX-50 is down 33 per cent this year to date, wiping $23.4 billion off the market's value.
Among finance companies over $2 billion of investors' funds has been caught up in receiverships or moratoriums this year alone. Add on a further $1 billion or so in investor cash tied up in mortgage trusts and a further half a billion or so tied up in frozen investment funds, such as ING's Diversified Yield Fund and Regular Income Fund.
With less than three weeks to go, can we get to the end of the year without investors losing another few million?
