Tamsyn Parker 's Opinion

Tamsyn Parker is the NZ Herald's Money Editor

Stock Takes: The big deal, Meridian, Z and Moa

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Moa chief executive Geoff Ross faced hard questions at the beer company's annual meeting. Photo / Dean Purcell
Moa chief executive Geoff Ross faced hard questions at the beer company's annual meeting. Photo / Dean Purcell

The Government's announcement of an early November listing for Meridian Energy confirmed market expectations although the timing was a little bit interesting.

The Tuesday press announcement was made the same day as Contact Energy's full-year result announcement in the middle of the busiest week for the reporting season.

Fund managers and analysts have had little time to mull over the news although the real analysis won't start until the prospectus is released - likely to be around late September/early October.

A date for the listing has yet to be set but Stock Takes is picking it will either be Friday November 1 or at a pinch November 8.

The later date would only just allow for enough trading days to let Meridian enter into the December index changes - potentially providing an important end-of-year boost to the company's shares.

Money making

The value of Meridian Energy is expected to be around $4.7 billion which means the Government will hope to garner about $2.3 billion from selling its 49 per cent stake.

According to Stock Takes' back of envelope calculations that could make it hard for the Government to get to its $5 billion to $7 billion target in its asset sales programme.

Meridian and Mighty River together have the potential to garner around $4 billion. Genesis was last officially valued at $2.05 billion but that is likely to be way off its actual value based on recent events and the down-scaling of Meridian's value.

If 20 per cent was knocked off for the control premium and a further 10 per cent for the regulatory uncertainty caused by Labour/Greens policy plans Genesis could be worth around $1.4 billion - putting a 49 per cent stake at just under $700 million.

Given Solid Energy's sorry state that would leave a further $300 million to come from reducing the Government's share of Air New Zealand from around 73 per cent to 51 per cent.

At yesterday's share price that would be possible.

Prime Minister John Key has said the Government will still meet its target albeit closer to the $5 billion mark.

But it doesn't look like there is much wiggle room especially when you take into account all the fees and marketing costs - not to mention the $30 million subsidy to Rio Tinto.

Going up

Z Energy has had a strong start to its sharemarket listing.

Shares in the petrol station chain began trading on Monday at a 6.6 per cent premium to its $3.50 initial offer price and have continued to follow an upwards trajectory. On Wednesday the shares passed the top end of its $3.25-$3.75 prospectus range. Yesterday they closed down 1c at $3.78.

The $840 million capital raising has been the biggest so far this year outside of Mighty River Power but demand has obviously been strong both for the float and its shares since then.

Infratil and the New Zealand Superannuation Fund who sold their combined 60 per cent stake must retain their remaining 40 per cent shareholding until the September 30 results are announced next year, likely to be around November.

Market players have been divided over what will happen beyond that. Some have speculated that Infratil will be keen to sell out given it no longer has a controling stake in the company.

Others have said they will be in there for the long haul. It may also depend a lot on what the market conditions are like in November next year.

If market conditions are buoyant a placement of the remaining shares to institutional investors could be done quickly at that time of year but a full capital raising with a prospectus would be unlikely to happen until the following year because of the time it takes to get a prospectus together and the fact that investors typically go away over the Christmas holiday period.

New owners

Z's list of its top 20 shareholders doesn't reveal a lot about the new owners of the company.

Outside of Infratil and the New Zealand Super Fund a nominee account for HSBC New Zealand has the largest stake at 7 per cent with National Australia Bank the next largest at 6.7 per cent.

The thing about nominee accounts is you can't tell who the underlying investors are, other than that they are clients of that organisation.

But it does reveal there was a fair amount of interest in the offer from across the ditch with JP Morgan Nominees Australia holding a 1.3 per cent stake, Credit Suisse AG Sydney Branch taking 1.2 per cent and HSBC Custody nominees (Australia) with 0.9 per cent.

Z has played on its New Zealand ownership in the past to appeal to punters. The Aussie element on the share register isn't expected to change the way the company markets itself.

Going down

Shares in beer maker Moa have fallen to a new low this week after the company received a grilling at its annual general meeting from respected fund manager Brian Gaynor.

Gaynor accused the craft brewer of failing to connect with its key audiences.

Moa has had more than $10 million wiped off its value since it revealed on August 12 that its sales volumes would be 30 per cent below expectations for the year.

Before the news it was worth $36 million and its shares were trading around $1.20.

Yesterday the company's shares closed down 6c at 72c, valuing the firm at about $21.7 million.

Marketing guru Geoff Ross is going to have to work hard to regain the confidence of investors.

Mighty test

Mighty River Power will give its first full year results announcement since listing on Wednesday and investors will be hoping the company hits its prospectus forecasts.

Offer documents predicted a net profit of $94.8 million in its year to June 30, 2013 with revenue of $1.34 billion.

The crunch point for new investors will also be confirmation of the company's first dividend payment, due to be made on September 30.

Investors will want to be soothed after facing a disappointing run from the company's share price.

Once Mighty River gets the annual result out of the way it is also expected to begin the hunt for a new chief executive.

Founding chief Doug Heffernan is due to leave the company in August 2014 after 14 years at the helm. Shares in Mighty River closed up 1c on $2.22 yesterday.


This story has been changed from an earlier version, which said Mighty River chief executive Doug Heffernan was allowed to stay on at the company with an advisory role. He is leaving in August 2014.


Tech connections

Technology company GeoOP has joined the ranks of firms wanting to list on the sharemarket in the wake of success story Xero, which closed up 12c yesterday at $16.12.

GeoOP, which provides online quote, booking and invoice services to trade and service businesses, wants to raise around $8 million from habitual investors in a private capital raising before listing on the NZAX - the exchange's alternative board.

The company is interesting because of its backers.

Chief executive Leanne Graham was previously country manager for Xero before taking up the top job at GeoOP in February and former NZX chief Mark Weldon joined the board last month. Weldon left the stock exchange in May last year to run his own winery in Otago. The only other listed company board he sits on is Diligent Board Member Services.

Diligent has been a strong performer in recent years until being hit by a slew of administrative errors.

According to its announcement GeoOP was started in 2009 and has over 4000 paying users in 13 countries. Graham says a listing would enable GeoOP to raise further capital to expand globally.

- NZ Herald

Tamsyn Parker

Tamsyn Parker is the NZ Herald's Money Editor

Tamsyn Parker is the NZ Herald's Money Editor. A business journalist for ten years, she has worked in the UK and NZ for the New Zealand Herald, the National Business Review and a specialist publication on investment products for financial advisors. She is passionate about helping readers learn more about to make their money work for them.

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