Stock takes: Return of the king

The chairman faces a tough challenge convincing GPG's mum and dad investors. Photo / Supplied

Stock Takes hears Guinness Peat Group chairman Sir Ron Brierley is making a special trip to New Zealand next month to visit major shareholders and try to calm what he is apparently labelling undue panic over the group's proposed demerger plans.

It will be a rare trip by Brierley who hasn't visited Auckland much since leaving New Zealand permanently more than 20 years ago to live in Sydney and London.

While Brierley used to return annually to Wellington - where he had a house and where his business was based - Auckland was usually off the agenda unless it involved a good cricket match, Stock Takes understands.

Brierley is expected to talk to six of the largest institutional investors which include ACC, AMP (which invests on behalf of the Super Fund), ING, Tyndall, and BT Funds Management.

It will be interesting to see if he also touches base with retail shareholders of which there are around 30,000 in New Zealand.

Kiwi investors have made it clear they aren't keen on the plan so unless it changes before then Brierley could have a tough time convincing investors to vote for it.

BANDING TOGETHER

New Zealand retail shareholders and institutions are hoping to work together to put forward some names of future potential independent directors for the board of troubled GPG.

With Tony Gibbs sacked from the board for speaking out against a proposed split of the business Kiwi investors, who make up a large part of the share register, are hoping to get at least one local on the listed investment company.

Names being talked about include former ANZ National Bank boss Sir John Anderson, Geoffrey Ricketts, Michael Stiassny and even Simon Botherway, although Stock Takes reckons he might be a bit busy setting up the new super regulator at the moment.

A spokesman for GPG could not confirm whether a New Zealand independent director would be considered, saying that the board was just looking for the "best qualified people for the job".

"We want to emphasise that this proposed restructure is not about individuals, it is coming to a united view on what is right for the company and dealing with the complexities making any decision involves.

"GPG and its board recognise that shareholder support, and particularly that of New Zealand shareholders, will be crucial to any restructure going ahead and increasing value to shareholders."

Local investors have a cynical view over the true "independence" of the new directors with some suggesting it will be loaded with people loyal only to Australian-based director Gary Weiss.

GPG shares closed down 2c yesterday on 64c.

TOUGH BUDGET?

Talk is rife about precisely how much money the statutory managers are providing to Timaru's Allan and Jean Hubbard.

A weekly allocation of around $1000 each is rumoured, although this is said to be considered by at least one of the couple as excessive.

Parsimony is one of the traits of the now-famous Morgans Rd couple.

Stock Takes also hears one of the worst punishments of having statutory management imposed on Allan Hubbard is his ban from daily trips into the offices of South Canterbury Finance.

He is not allowed to go into work and breaking the habit of a lifetime for an 82-year-old is proving difficult, Stock Takes is told.

We can't see Hubbard on Skype, a Blackberry or being a big fan of emails and online. However, we are reliably informed he does have a cellphone.

LOOKING SOUTH

The investigation of the Hubbards by the Securities Commission and the Serious Fraud Office has had many questioning why more action hasn't taken place when it comes to a certain Auckland-based business which sold its loan book last year.

The Securities Commission has said it is looking into all failed finance companies but it wasn't confirmed until this week it was also looking into Hanover Finance.

The investigation was outed by Allied Farmers chief executive Rob Alloway, who has said he can't talk about details of its $5 million dispute with Hanover because of a Securities Commission order.

The order states that any proceedings must be "held in private, prohibiting, with effect from the commencement of the inquiry to the end of the inquiry, publication or communication of any information, document or evidence that has been provided or obtained in connection with the inquiry except with consent of the commission, and the giving of evidence involving such information by any person subject to further orders by the commission".

Apparently the Commerce Commission handed over its investigation to the Securities Commission in August last year after deciding it was not its bag.

BOUNCING BACK

Things are looking up for rubber maker Skellerup. The company surprised the market this week with a profit upgrade - one of the few companies to do so this year.

Skellerup says its year to June 30 net profit will now range between $10 million and $11 million - up from the $8.5 million it predicted at its half-year result.

Skellerup shares bounced up 5c to 68c on news of the forecast.

Forsyth Barr analyst John Cairns says he had thought the $8.5 million was conservative before the announcement. "We had already been forecasting a profit of over $9 million. But the quantum of the upgrade certainly surprised me."

The largest part of the increase has been driven by improvement in its industrial division after strong demand from new and existing clients in Australia, the United States and Europe.

Skellerup makes a range of products in its industrial arm including rubber mats, fenders for boats and wharves as well as some less obvious rubber mouldings called "fowl plucking fingers" and "shock absorber bushes".

Cairns says the result bodes well for the company's future profits. "The implications for FY2011 and subsequent years are pretty positive." Skellerup closed up 2c yesterday at 70c.

RED WEEK

The New Zealand sharemarket has been a sea of red this week following down markets around the world and getting close to a 12-month low.

Yesterday the NZX-50 index hit 2932.32 beating the recent low on June 8 of 2988. That is its lowest point since July 23 last year when the market hit 2918.63.

The fall has investors looking on worriedly and talk of the 'W' or "double-dip" theory has resurfaced.

Investors have fled the US stock market this week with the S&P 500 tumbling to its lowest level in eight months on fears about the stability of Europe's banks.

Investors have been worried about a potential liquidity shortfall of more than €100 billion in the financial system as European banks repay €442 billion in emergency loans this week.

RISING COSTS

It's not just power and petrol companies putting their prices up this week. The NZX has increased its annual charges 6.5 per cent for the debt market and an average of 17.75 per cent for all other markets.

The NZX promised in 2006 to hold its prices at the same level until 2009 but then decided not to increase them then because of the global financial crisis.

The 2010 increase, which kicked in yesterday, is designed to make up for the past few years, as well as inflation and GST costs which will rise from October.

The company is also citing increased technology and regulation costs as a reason for the price increase. It says the rise is nothing like the 30 per cent which the ASX whacked on its fees last year.

But unsurprisingly the price rise has not been well received by all in the market.

One source said it came at a difficult time for most companies and was an unusual step when there was so much focus on making the capital markets more robust.

"Given where global markets are it seems like an unusual strategy if you are genuinely interested in long-term growth."

There hasn't exactly been a flood of new equity listings on the market in the past few years so perhaps it's not surprising that NZX has had to put its fees up to stay profitable.

NZX shares closed down 7c yesterday at $1.42 - a new low for the year.