KEY POINTS:
The Shareholders Association's Bruce Sheppard has written to shareholders in Geneva Finance in a bid to drum up the 5 per cent support necessary to force an extraordinary general meeting. Sheppard wants the meeting in order to facilitate the removal of three existing directors.
Those directors include a
former big shareholder in the company Peter Francis, along with Brian Walsh and David O'Connell. In their place Sheppard wants Tony Boswell and June McCabe, who are experienced bank board members, and himself.
With the company's debenture and note holders now holding new shares in the company as a result of its restructuring, Sheppard argues, with some justification, that they should have some truly independent directors on the board.
He argues that three directors he wishes to replace all have "form", ie less-than-distinguished records when it comes to protecting shareholders' interests.
"It is a time for that company to have some genuinely independent directors."
Sheppard, who says he threw his hat in the ring only because he was unable to find a third suitable candidate, reckons what the company probably needs to do is stop lending, cut overheads and concentrate on collecting loans in order to repay investors.
"We know the company is continuing to run as it did before by people who drove it to the edge of failure."
Some of Geneva's new shareholders are clearly new to the game, with one contacting Stock Takes this week wanting to know who this Sheppard character was and whether he could be trusted.
HOW INDEPENDENT?
But hang on a minute, if successful, Sheppard's plan would still leave pre-moratorium major shareholder and former managing director Glenn Walker on the board. Surely he must take some responsibility for the company's misfortunes?
Going further, a quick look at the Companies Office website shows Walker is a director in a company incorporated late last month called GSWalker Ltd, whose other director is Bruce Sheppard.
Stock Takes is aware of speculation that this is all about a battle for boardroom control between the two former dominant shareholders, with debenture holders and note holders, who now own more than 80 per cent of the company, the meat in the sandwich.
Given the involvement of Sheppard and the Shareholders Association, we hope not. Sheppard assured Stock Takes yesterday this was not the case.
He has a historic and ongoing business relationship with Walker who, he says, was unaware that the Shareholders Association was seeking the board appointments.
GREAT MINDS
Stock Takes has a great deal of respect for the Shareholders Association and Sheppard for their efforts on behalf of minority shareholders.
Sheppard has raised awareness and driven media coverage on a number of significant issues for a long time.
His direct and colourful language makes for very good copy - once the blue elements are toned down.
Given that Stock Takes has written about this a couple of times in the past, it's nice to see Sheppard has also recently gone to the Securities Commission objecting to NZX's practice of delaying the release of market announcements by 20 minutes on its free-to-air website.
Without beating around the bush, Sheppard asserts the reason for the delay is "to give those subscribers to NZX prior information. This amounts in effect to the facilitation of insider trading, a procedure that the commission is legally required to address."
The commission had yet to respond, Sheppard told Stock Takes this week.
TOP OF THE STOCKS AND BOTTOM OF THE BOURSE
Three quarters of the way through what has been a hell of year for the market, it's probably worth a look to see which of our top 50 stocks have performed best and worst.
Top stock this year is Sanford which has posted a return of 46.9 per cent. The fishing company is the classic currency sensitive stock and its rising fortunes have coincided with a substantial fall in the local currency notwithstanding a big increase in fuel costs.
Pike River Coal comes in second with a return of 41 per cent, not bad for a company yet to produce anything. It has inked some very lucrative contracts for when it is up and running though.
Pike's parent NZ Oil & Gas has also bucked the trend posting a 30 per cent return. Another energy stock, albeit with more of a consumer focus, Contact Energy was fourth best performer returning 8.25 per cent. Fifth best was Rubicon with a return of 5.56 per cent - in the current climate the kind of gain that can be wiped in one session.
On the down side, the worst performer was Tenon with a negative 50.67 per cent return. Selling stuff used in the US house construction industry is not the most lucrative business now.
Three of the four other worst performers are consumer exposed stocks, with F&P Appliances down 47.7 per cent, and Pumpkin Patch down 45.9 per cent. Tourism Holdings, reliant on discretionary dollars, was down 42.04 per cent while The Warehouse was down 42 per cent.
MAKE LOVE NOT WAR
A war of words broke out this week between the ASX and NZX with departing ASX chairman Maurice Newman labelling New Zealand and its sharemarket "internationally irrelevant".
What's more Newman, who was in charge of the ASX when it attempted to "merge" (ie take over) with the NZX several years ago, blamed his lack of success in this regard on New Zealand's "provincial preoccupation with sovereignty".
To put Newman's comments in context, the Australian Government and regulators are currently considering applications from three companies interested in establishing low cost equities trading platforms that would compete with the ASX, one of them being NZX's AXE ECN joint venture.
"The latest attempts to fragment our markets by potential new operators will do little, if anything, to increase competition," said Newman.
NZX chief executive Mark Weldon said Newman's words "serve merely to confirm that the ASX continues to shore up its dominant position in light of growing diversity and competition in his home market".
Perhaps wisely, Weldon didn't spend too much time playing a negative game, instead he professed his deep respect for Australia "and the accomplishments of its corporate sector".
He also called on the ASX to join the NZX in seeking a "a passporting arrangement that allows New Zealand and Australian exchanges, and broker-dealers, to compete effectively in each other's markets without duplicative regulation".
HANDS OFF PLEASE
In Newman's speech, Stock Takes notes that he pointed out the ASX's six largest companies each had a market capitalisation in excess of that of the entire NZX. That particular comparison rings a bell, Stock Takes wonders where he got that from?
Newman also referred to the question being asked in the New Zealand media "Can The NZX Be Saved?", again somewhat familiar.
Newman reckons "many New Zealanders may be questioning the wisdom of not proceeding" with ASX's merger proposal back in 2000.
Having written the story carrying the headline referred to by Newman, Stock Takes can assure him that while most of those spoken to in preparing that story were worried about the future of the NZX, none thought the ASX's failed takeover was a fantastic opportunity squandered.
Most were more concerned about how we could ensure the market gains vitality to support the infrastructure, people and skills that are of benefit to the whole economy but which would largely be lost if we didn't have it.
The general view, expressed by Weldon, was that New Zealand would be far more provincial without its own stock market.
