Stock Takes: Selling off the good and the bad

Finding new owners for the 'good bank' side of SCF is expected to take well into next year. Photo / Sarah Ivey

Taxpayers hoping the appointment of banking advisers to a number of South Canterbury Finance assets will mean a quick sale could have their hopes dashed.

McGrathNicol receiver Kerryn Downey has said he hopes to see the Helicopter (NZ) and Scales Corporation assets under offer by Christmas but market sources suggest nothing much will happen this side of Christmas.

When the Government is involved all the "i"s have to be dotted and going through the correct processes takes time.

Some suggest it could be the second quarter of next year before either deal is finalised.

The "good bank" part of the business is expected to take even longer to sell while the "bad bank" is expected to be put to one side while the loans are worked through.

MANAGING YELLOW

Debt-laden Yellow Pages Group is in the process of working through a restructure which involves the appointment of a new board.

But Stock Takes understands it's proving hard to get consensus among its bankers with about half wanting to bring in external consultants to manage the company and talk of replacing the senior management team.

A source familiar with the discussions says they are back to where they were three or four months ago.

Global consulting firm FTI has been mentioned again although Stock Takes understands New Zealand investment managers Morrison & Co have also expressed an interest in managing the business.

Morrison & Co chief executive Marko Bogoievski was chief financial officer at Telecom when it sold off the Yellow Pages business and would know the asset well.

It must be tempting for Bogoievski to have another shot at it although it's hard to know what he could do with the business.

Calls to Bogoievski and senior Morrison & Co staffers were not returned yesterday.

TOO MUCH TEA?

Avid shareholders were kept on their toes yesterday with a raft of annual general meetings held up and down the country.

In Auckland investors had the choice of Freightways, Auckland International Airport and New Image Group in the morning followed by a quick lunch break and then Sky TV in the afternoon.

Christchurch investors had the option of attending PGG Wrightson and Lyttelton Port.

One shareholder at the Auckland Airport meeting questioned why so many were being held on the same day, an issue he had raised at previous meetings, which the board had promised to take into consideration in the past.

Outgoing airport chairman Tony Frankham said it did not have any control over when other companies held their AGMs.

"We do not do it intentionally," he said.

Instead he suggested the best solution would be for the NZX to put together a schedule which companies could follow. Now there's a novel idea.

FEET ON THE GROUND

Any New Zealand Oil & Gas shareholders impatient for overseas growth were left wondering following the company's annual meeting this week.

The exploration and production company with $142 million in the bank has for the past three years been scouting exploration and reserves acquisition opportunities abroad but besides taking a 15 per stake in Pan Pacific Petroleum and spending $550,000 on a Romanian venture which didn't come to fruition, it has stopped short of any big commitment.

With four Taranaki targets coming up dry over the past year some investors are eager for some overseas action.

Chairman Tony Radford says the rock-bottom bargains failed to materialise after the global financial crisis.

"A lot of people with deep pockets were waiting for the deals to get better and better but it didn't happen. With some of the things we assessed in Australia, history has proved us right."

Any deals would have to leave the company with a cash buffer of around $50 million.

Radford says the company aims to commit overseas within the next 12 months.

He remains coy on the location of potential targets, perhaps in the Asia-Pacific region or further afield.

"They're definitely on this planet."

TWO BECOME ONE

New Zealand commentators have been quick to make doom-and-gloom predictions about the New Zealand stock exchange in light of the proposed A$8.4 billion ($10.95 billion) merger of the Australian and Singaporean stock exchanges.

But it's hard to see how it will make that much of a difference, given Australia is already so much bigger and New Zealand companies already have the option of listing across the Ditch if they want to.

The proposal is a corporate merger and does not mean companies listed in Australia will automatically get a Singaporean listing.

The deal still has to get the thumbs-up from Australian politicians, which could be a hard ask in its current political situation.

But the proposal has won admiration from NZX boss Mark Weldon.

"I would say that the ASX has run a very tight ship, it has aggressively managed its cost base and kept margins tight. The offer has been made at a very good takeover premium and the ASX should be congratulated on the deal."

Stock Takes can't help thinking Weldon must have looked at the deal and wondered "what if" he could do the same with the NZX. It must be hard to take an independent view when you are both a large shareholder and the chief executive.

Weldon has said the NZX will review its strategy, taking into account both shareholders and stakeholders. He has also pointed out that any significant sale (over 10 per cent) of NZX shares to a foreign-owned company would require political approval. Shares in NZX closed up 1c on $1.57.

KIWI REACTION

New Zealand's dual listed companies have been pretty ambivalent about the merger so far with most taking a wait-and-see approach.

Fletcher Building head of investor relations Philip King even went so far as to admit they are more excited by an ASX consultation document out at the moment.

The document proposes changing the way New Zealand and Papua New Guinean companies with secondary listings on the ASX are eligible for its indices.

At the moment New Zealand companies are automatically classified as domestic and their inclusion in an index is based on total market capitalisation.

Telecom is the only company to qualify for the all-important S&P/ASX 200 which means it automatically gets invested in by index tracking funds.

But King reckons the proposed new system which would just take into account the market capitalisation based on how many Australian investors a company has would benefit Fletcher Building and catapult them into the top-200 index.

According to Bloomberg data around 25 per cent of Fletcher Building is owned by Australians whereas Telecom has only about 16 per cent Australian ownership.

Telecom's Australian ownership has sunk in recent months - it used to be up around 28 per cent. The proposed change could see it out of the top-200 index, meaning it would potentially lose even more Aussies.

A Telecom spokeswoman said it did not want to comment on the proposal while it was still in the consultation phase.

Submissions close at the end of next month. Fletcher Building shares closed up 18c at $8.20 yesterday while Telecom closed up 3c at $2.07.