Stock takes: Good mates

Mark Ratcliffe and his four-man walking team raised $6310 for Oxfam. Photo / Kenny Rodger

It seems it's not just structural separation and a potential float that investment banker Dion Werbeloff is helping the guys at Telecom with.

Werbeloff, who heads up the Sydney-based corporate advisory team for Goldman Sachs JBWere, sponsored a team from Telecom's network business, Chorus, to take part in the Oxfam walk - to the tune of $200.

It was one of the larger donations to the total of $6310 raised by the four-man team, headed by Chorus boss Mark Ratcliffe,

Telecom chief Paul Reynolds was the biggest donor giving a generous $500 while Werbeloff was one of 10 people to give $200.

Mind you, Werbeloff will more than make it back if the Telecom deal is done.

NOTHING NEW HERE

News of Telecom's share price hitting a new low has become so old hat it's not even getting much attention anymore.

Telecom's shares touched $1.79 on Wednesday with no new corporate news out of the company.

Investors don't seem to be impressed with the separation talk although perhaps they just want to see the details nailed down.

The decision on whether Telecom goes ahead with structural separation seems to hinge on whether it wins the tender in the Auckland market for the Government's ultra-fast broadband plan.

Vector appears to be quietly confident it will secure the country's biggest city.

But even if Telecom doesn't grab Auckland surely something else will have to change at the company to get investors back on side. Telecom's shares closed up 6c at $1.87 yesterday.

BROOK VS DEVON

The spat between fund managers Brook Asset Management and Devon Funds Management is heating up with both sides calling in lawyers.

But Stock Takes can't help wondering if it's just a lot of hot air being blown out of Australia on the part of Brook owner Macquarie.

The letter sent by Brook alleging a breach of fiduciary obligations by investment managers Chris Gaskin and Slade Robertson is a strong accusation, perhaps one of the worst that can be made in the fund management world given the trust that people place in portfolio managers to look after millions of their dollars.

But let's face it, fund managers move on to other companies all the time as do professionals in other industries.

Macquarie certainly hasn't been shy of trumpeting its new appointments when it secures staff from other firms, even placing advertisements in newspapers.

Perhaps the biggest problem has been the communication between the parties. It seems Macquarie didn't know how unhappy its people were and the departing staff didn't make it clear to the bosses.

Then again, if you don't like the company which owns and directs the business you work for, the only option is to look for a job elsewhere.

ASB SHAKE-OUT

ASB Securities is the latest broking group to face a shake-up.

One investor who contacted the Business Herald yesterday said his broker had been told he would no longer have a job after today.

A message on its website says ASB has undertaken a strategic review of its wealth business and is proposing to discontinue the client advisory service.

Acting managing director of ASB Securities John McMahon says the company is going through a consultation process with staff which is expected to be completed by today or early next week.

"Until we get to the end of that we can't be definitive about what is going to happen," he said.

Stock Takes understands six staff members are involved in the talks. McMahon says it's too soon to talk about why the review has taken place but it's no reflection on the individuals involved or the business' trading and profitability.

McMahon resigned as head of ASB Securities in January and has since moved to Australia to run his own investment portfolio.

He's just back in town to help manage the business while the consultation takes place.

BACK ON TRACK

Nuplex, which clawed its way out of disaster last year, has confirmed its half-year earnings before interest, tax, depreciation and amortisation (ebitda) are on track for a record result.

The resins manufacturer is expecting ebitda in a range of $125 million to $135 million for the six months to June 30 and says demand is picking up in its key markets.

An investor update this week shows the company slashed its bank debt from $371 million at the end of 2008 to $116.8 million by the end of 2009 while increasing its equity from $368.9 million to $518.5 million.

That's not bad for a business that was in the doldrums last year.

Morningstar analysts have been impressed and have upgraded the stock to accumulate.

"The stock has seen a decent pullback and now appears reasonably attractive in our view," the company says.

Morningstar says Nuplex's investments in Asia are likely to offer strong long-term growth opportunities and it expects the resins maker to undertake more acquisitions.

But it warns the company faces risks from uncertain growth in Europe and Australasia - it's two main markets - and exchange rate fluctuations.

The other cloud on the horizon is the court action being taken by the Securities Commission. Nuplex has requested the case be transferred to the High Court at Auckland, from Wellington, and doesn't expect the case to be heard until next year. Nuplex's shares closed down 1c on $2.87 yesterday.

JOIN THE DOTS

Last Friday, just before Queen's Birthday weekend, property business DNZ announced it would buy Paul Duffy and Alastair Hasell's management contract of the business for $35 million.

Then on Tuesday, DNZ said it would seek $35 million from its shareholders. We wondered if, by any chance, the two are connected? Tim Storey, chairman, replied: "Everything in the world is connected," but challenged putting the two together.

Duffy and Hasell are getting $25 million and leaving $10 million in, he said. So how, Stock Takes wondered, were they being paid out? With debt, Storey said. Ah-ha. And what would the $35 million capital-raising be used for?

To repay debt.

BLAME IT ON THE RULES

Evidently, securities regulations have barred DNZ from joining the dots and issuing the two pieces of new information simultaneously.

Storey urged people to keep it all in perspective: $25 million on assets of $700 million and debt of about $300 million.

So why did Duffy and Hasell not get the nicer $52 million Deloitte valued the management contract at?

"Because we negotiated. We never proposed to pay $52 million," Storey said.

Paul Duffy's contract as chief executive starts on July 1 and is for three years.

DNZ shareholders will vote on the capital raising at their annual meeting expected to be held in Auckland next month.

ALLIED SHUT OUT

Embattled Allied Farmers has been shut out of the NZX-50 index again in its June review.

The NZX index committee created a stir back in February when it flip-flopped on its decision to include Allied, prompting a share price spike.

And now the committee says it is "exercising its discretion" to discount Allied from the index at this time because of stability and investability concerns.

Allied managing director Rob Alloway says it feels like the company is being singled out.

"It seems like there is one set of rules for some and another for others. We do think it is quite unfair the way we are being handled," Alloway said.

He questioned whether the NZX had exercised its discretion in this way before.

A spokeswoman for the NZX said she was not aware of a similar decision being made in the past but said Allied had an unusual corporate structure because it had grown in size quickly through the combination of two businesses and the company needed time to bed the changes in.

"One thing the index committee is anxious to avoid is companies coming in and out of the index.

"Until such time as the new corporate structure has stabilised, the company will be continually evaluated."

The committee has said it will look to include Allied after March 2011 if it meets the inclusion criteria at all the quarterly reviews until then.

The NZX is presently reviewing its index methodology and procedures.

Allied shares closed up 0.2c at 4.7c.