Andrew Barclay, chief executive of Goldman Sachs NZ. Photo / Michael Craig
The New Zealand Shareholders' Association (NZSA) is concerned about the time investors were given to come to terms with Air New Zealand's capital raising, although it considers the $1.2 billion offer to be fair.
Rights trading got off to a volatile start on Monday. Both the rights and the head shares did not adjust to their theoretical prices, reflecting general confusion around the offer.
NZSA chief executive Oliver Mander said investors - many of them individual or "retail" shareholders - should have been given more time to digest details of the offer.
"We are concerned," Mander told Stock Takes.
"It is already a complex offer and we are concerned about the confusion that has surrounded it for professional organisations as well as retail investors.
"The main thing that we are focused on now is really to implore investors to make sure that they understand the offer and its implications prior to trading in anything, really."
Mander said he was puzzled at why Air NZ's advisers structured the offer in the way that it was.
"We actually appreciate that the offer is a renounceable rights offer - it's very fair to existing retail investors and we think that's a good thing.
"But certainly, the way that the rights issue is structured - with one right being applicable for the purchase of two shares - that simple maths actually threw quite a few people."
The offer is a departure from normal rights issues, in which investors have come to expect one right to buy one share.
The offer led to an NZX error - which was corrected - on Monday morning when the rights opened for trading.
The period between the announcement of an offer and when the rights start trading is usually five days. But in the case of Air NZ, it was two because it was granted a waiver by the exchange's regulatory wing, Regco.
Mander said the association was concerned about the offer's timing, given its complexity.
"It's a pretty short period of time for investors to make their own assessments."
However, he said the structure itself was clear.
Sharesies - a popular platform for retail investors - has 100,000 users who own shares in Air New Zealand.
Mander said the high level of retail ownership would have implied that more time and more material was needed to make the offer as easily understandable as possible for everyone.
"The first priority is to make sure that investors really understand what they are getting into when they purchase the shares and the rights."
Air NZ is a predominantly retail-based stock; institutions have not purchased the airline's shares for some time.
Mander said the head shares and the rights were trading well above levels that would have been expected. "We were worried that the share prices were actually disconnected from the fundamentals of the company.
"We are concerned about the timeframe between the announcement and when the share went ex-rights - when the rights started trading."
The price of shares and the rights are now back to near their theoretically adjusted levels.
The capital raise is Air NZ's recognition that it faces a bumpy ride over the next few years.
It is aimed at recapitalising its balance sheet and repaying the loan it received from the Crown during the Covid crisis.
"This is an important step in refuelling for our recovery," the company says.
Investment banking firm Goldman Sachs NZ, whose ultimate parent is New York's Goldman Sachs Group, has reported a sharp drop in its net profit for 2021 to $5.69 million, according to a filing with the NZ Companies Office.
That compares with a profit of $13.67m in the previous year.
Goldman Sachs NZ's revenue dropped to $27.43m in 2021 from $40.67m a year earlier.
"At the time of the approval of the financial statements there continues to be uncertainty regarding the impact of Covid-19 on the near term economic outlook, even with the ongoing roll-out of the vaccine program," the directors said in the filing.
"The company has been monitoring the impact with respect to Covid-19 to its financial instruments, considering multiple factors including, but not limited to, performance indicators, industry events and macroeconomic indicators," they said.
"The extent of the impact of Covid-19 on the company's operational and financial performance will depend on future developments, including the duration and continued spread of the outbreak."
Shares in cancer diagnostics company Pacific Edge (PEB) have dropped significantly since its $80m capital raise and ASX listing last September.
The stock now trades for around a dollar, having peaked at $1.56 just before the capital raise.
After the recent "share price compression", Jarden analyst Christian Bell reassessed PEB's investment case.
"When PEB raised capital last year there was a pivot that created some uncertainty, as it recognised the need for a more resource-focused strategy.
"Following this, PEB has the cash to support extra resources required, as it looks to capitalise on its first mover advantage to provide a bladder cancer biomarker test that delivers superior clinical utility."
To date, volume has been softer than expected following milestone events (signing up users Kaiser and Medicare) and Covid has likely been a significant handbrake on momentum.
"With that being said, we see sales execution as the key going forward, and PEB has a new chief executive (Dr Peter Meintjes) to lead the commercialisation."
Jarden has reduced its target price for Pacific Edge to $1.10 from its previous target of $1.40. The stock currently trades around 99c.
The reporting season looms for those stocks with March 31 balance dates.
Once again Covid-19, inflation, rising interest rates and now Russia's invasion of Ukraine look likely to present challenges for many.
"We are watching like hawks to see what that means for some of the earnings confessions coming through," said Harbour Asset Management portfolio manager Shane Solly.
"It will be another really tough period for companies to provide clarity," he said.
Companies looked to have been travelling quite well until January and February, Solly said.
"But now we are in challenging times again."
BGH's tilt at Tourism Holdings has sparked more merger and acquisition speculation.