Stock Takes: Sir Ron's retort

Sir Ron Brierley doesn't mince his words about Bruce Sheppard and the Shareholders' Association. Photo / Greg Bowker

Opinion

There is no love lost between Brierley Investments founder Sir Ron Brierley and former NZ Shareholders' Association chairman Bruce Sheppard, going on their latest email exchanges.

The February 16 issue of Stock Takes published parts of Sheppard's response to Sir Ron's letter to current chairman John Hawkins which labelled the association as "anonymous corporate busybodies" and "show ponies".

Sheppard responded angrily, accusing Sir Ron, among other things, of being out of touch with the evolution of capital markets.

In Sir Ron's latest missive, forwarded to Stock Takes, he says: "Shareholder associations are fine in theory but, in practice, they become a refuge for misfits, malcontents and blowhards.

"You presume to lecture me on corporate integrity but I was a shareholder activist decades before you knew what the words meant. Wellington Trust Loan and Investment in 1959, Hallenstein Bros in 1960 etc.

"I quickly realised an individual was essentially powerless, and that capital with commitment was necessary - hence the incorporation of BIL on March 30, 1961," Sir Ron writes.

"Also known as 'skin in the game', which you and NZSA have never had. That's all for now! Regards Ron."

BUOYANT FLETCHER

September's Christchurch earthquake and its even more devastating aftermath last week have not been lost on Fletcher Building's army of followers.

The stock currently trades at around $8.50, about $1 higher than its pre-September levels. The company's takeover bid for Australian plumbing supplies and plastic pipelines maker Crane Group does not appear to have done the stock any harm either.

Fletcher Building had already been selected to undertake project management for the Earthquake Commission after the September quake. The company had also signed up for $190 million of infrastructure repairs in a joint venture with McConnell Dowell.

As a result of the February 22 quake, Fletcher Building's residential repair programme is on hold, chief executive Jonathan Ling told an investors' briefing. He said there had been short-term disruption to trading but Fletcher Building's Canterbury operation received only minor damage.

But with about 10,000 Christchurch homes made uninhabitable by the quake, severe damage to the city's infrastructure, and about one third of the buildings in the CBD either destroyed or scheduled for demolition, Fletcher Building will have a full order book.

Goldman Sachs NZ has upgraded Fletcher Building to "buy" from "hold" as a result of the latest earthquake. "In the medium term, we expect Fletcher Building to benefit materially as volume and operating leverage compounds through to a significant boost to earnings," the brokerage said in a research note.

Shares closed at $8.71 yesterday, up 17c.

BLUE STAR REFINANCING

News that printing company Blue Star Group has improved its financial performance will be of some comfort to its bond holders.

The company says initiatives to reposition the printing business in Australia and New Zealand over the past 12 months are beginning to show through in an improved financial and operating performance.

Blue Star's normalised earnings before interest tax, depreciation and amortisation (ebitda) increased 3.3 per cent for the group in the six months to December 31.

Winning the ACP Media New Zealand printing contract this year was a step in the right direction for the company.

Blue Star says it has the support of its senior lenders and its major shareholder, Champ. A refinancing package, including a further cash commitment from its shareholders, is dependent on a number of requirements which, once satisfied, will extend the current senior facilities from 2012 to 2015, the company said.

Details of the revised package, including the proposed terms of the capital bonds refinancing, will be announced soon.

Blue Star's September 2012 bonds currently trade at 28c in the dollar.

NUPLEX'S PARTING SHOT

The Securities Commission and Nuplex Industries announced last week that they had reached an out-of-court settlement, involving the company paying just over $3 million to all its shareholders who bought shares between December 22, 2008 and February 18, 2009.

Nuplex shares would have plunged by as much as 30 per cent had the company informed the market it was in breach of its covenants when the information first became available, the commission said.

The NZ Shareholders' Association said the Securities Commission has demonstrated a cynical disregard for the rights of shareholders in reaching the settlement.

"The reparations and costs of $3.2 million will come from the Nuplex shareholders themselves, as it is the company that has agreed to the settlement," the association said:

"This is a classic robbing Peter to pay Peter scenario."

Nuplex is no doubt happy that the issue has been laid to rest, but it has highlighted the following clause in the settlement: "The acknowledgement made by Nuplex in the settlement agreement is caveated, in that it is stated to have been made between the commission and Nuplex only and is neither an admission of liability to any other person nor an admission that the matters acknowledged caused loss to any other person".

Nuplex shares, which have been under downward pressure since late last month, closed up 5c at $3.39 yesterday.

NICE TRY

REDgroup's voluntary administrators, Australia's Ferrier Hodgson, survived a challenge to its appointment at Tuesday's first meeting of creditors.

Only one of the 200-odd creditors, NZ Customs Service, put forward a motion to fire the multinational in favour of local administrator, Damien Grant, of Waterstone Insolvency.

Creditors have complained that Ferrier Hodgson's A$625 ($846) an hour rate looked a bit steep, to say the least.

Ferrier Hodgson's John Melluish, who chaired Tuesday's meeting, told creditors REDgroup's size meant that it was likely to have been dealt with by either Ferrier Hodgson or any one of its Sydney-based competitors, who all charge about the same rate.

Any plan to oust Ferrier Hodgson was not going to happen, because it required 75 per cent support from creditors by value and more than 50 per cent by number. REDgroup, owner of the Whitcoulls book retail chain, was thrown a lifeline by its owners, Pacific Equity Partners, late last year. The company's secured debt stands at A$118 million, most of it owed to PEP, so PEP is its largest creditor.

As it turned out, NZ Customs Service's proposal gained the support of just one creditor - itself.

SKELLERUP RETURNS

Specialised rubber goods manufacturer Skellerup Group has seen a solid return to investor favour over the past 12 months, during which time its share price has more than doubled.

The company, which said last week that it would not be affected by the Christchurch earthquake, reported a net profit of $9.8 million for the six months to December 31, almost triple the number reported for the previous corresponding period.

Skellerup is now looking at a net profit of $18.5 million to $19.5 million for the year to June 30.

Shares closed up 1c yesterday at $1.28.