Stock takes: The rights is priced

As is so often the case, the market is taking its time getting its head around the implications of Pyne Gould Corporation's six-for-one at 40c a pop rights issue.

PGC's shares were trading at $1 each immediately before Wednesday's announcement of the hotly anticipated capital raising and rose as high as $1.18 afterward before subsiding to close at 99c each by the close of play.

Yesterday they sank as low as 80c before closing down 18c at 81c.

Of course the existing shares will be diluted by the issue of six times as many new 40c shares, but each one carries the additional value comprising the difference between the exercise price and whatever the post issue price turns out to be - times six.

While the exercise price is at a 60 per cent discount to PGC's pre announcement price, it is, as First NZ Capital's Martin Stern pointed out on Wednesday, a 20 per cent discount to "Terp" - that's "theoretical ex rights price".

Hope that helps.

GIVE US A LOOK

This week's report on the Securities Commission's effectiveness as a regulator made for interesting reading. It points to a lack of resources at the commission but also recommends that as the regulator responsible for prosecuting instances of insider trading and other market manipulation, it should "work towards securing real time access to full trading data".

What? It doesn't have this already?

"It's partly a cost constraint," chairwoman Jane Diplock told us yesterday.

"There are systems that would give us real time trading data and we're looking at buying one in."

Stock Takes would have thought NZX would happily supply this facility to its regulatory partner gratis, it's not as if they're short of a bob or two at the moment, and the commission is a non-profit, actually a very non-profit, organisation.

We can only hope both organisations heed the report's recommendation that they "continue their efforts to develop a more constructive and positive working relationship under the co-regulatory model" and they can work something out.

GOODBYE MACQUARIE

George Kerr's Equity Partners Infrastructure Company's (Epic) capital raising closed last Friday raising $28.79 million, just under half the maximum it was seeking.

Still, at least it raised the minimum amount, being $28 million required to repay short-term debt to National Australia Bank, which was used to fund the recent investment in UK motorway services business Moto International.

Stock Takes also understands the amount raised means partial underwriter Macquarie doesn't have to meet any shortfall. In fact Epic bought the Moto stake from interests associated with Macquarie. Stock Takes still doesn't quite understand why Macquarie wanted shot of such a fantastic investment in the first place.

HELLO, GOLDMAN

Former Macquarie New Zealand head of financial services John Rowley has resurfaced at Goldman Sachs JBWere.

"It's a new life after having three months off," he told us yesterday.

During his time off Rowley was asked by a number of investors to manage their portfolio and decided to take up an opportunity at Goldman Sachs where he is now director of private wealth. "It takes me back to my roots, being involved daily with clients and equities," Rowley said.

CHEEKY ECONOMISTS BANK ON BNZ'S POTENTIAL TAX BILL

This week's favourable current account data owed a lot to the $661 million potential tax liability BNZ faces in relation to its "structured finance" tax bill.

Although it has not handed the cash over, the bank, having lost round one against Inland Revenue in the High Court, has set aside the sum in its accounts.

"If we were cheeky, we would say BNZ has single-handedly alleviated the nation's current account concerns," the bank's economists said in their commentary on the data. The IRD might argue the bank was pretty cheeky in not paying the tax in the first place. Still, given the woeful state of our balance of payments, wouldn't it be nice if we could receive similarly large boosts in future.

Hang on a minute, Westpac is on the hook to the taxman to the tune of over $900 million. A decision from the High Court on its challenge to the IRD's ruling is due any day now. Then again, Stock Takes understands Westpac's structure in New Zealand means any provisioning for, or ultimate payment of this amount won't show up in the balance of payments.

That leaves ANZ National with $562 million in dispute and Commonwealth Bank of Australia, which owns ASB, with $280 million. Perhaps this potential liability was the reason the other bank economists preferred not to name BNZ as the source of the improvement in the current account data.

LOCKING IN ON A SHARE PRICE

The record date for Rakon's share purchase plan has been set for Tuesday next week.

The GPS component maker announced a $65 million capital raising this week, comprising an initial $45 million institutional placement at $1.15 per share. It's been a busy week for chairman Bryan Mogridge who as a director of Pyne Gould Corp took a leading role in formulating PGC's capital raising, also announced this week.

Eligible Rakon shareholders can buy up to $15,000 worth of shares through the purchase plan at the lower of the $1.15 placement price or at a 2.5 per cent discount to the company's five day average price prior to the closing date for the offer which is October 19.

Applications will be scaled back if the total received exceeds $20 million.

The company's shares were trading at $1.49 before the announcement. They have been trading between $1.25 and $1.30 since. Yesterday they closed at $1.25.

Unless they consistently trade 7c or more below that for the five days up to October 19, it looks like $1.15 it is for the share purchase plan.