Produce leader set to cause a stir

By LIAM DANN


Turners and Growers should still attract some market action when it lists today, despite an apparent lack of liquidity and no new shares on offer, says a broker.

Nigel Scott, of ABN Amro, who has a long history of trading the stock on the unlisted market, said he was confident of sellers as well as buyers when the company transferred to the main board of the NZX this morning.

He said it was an interesting company with a long history and had been a good dividend payer during the past 10 years.

There is no shortage of investor interest in the company - which dominates the domestic fruit and vegetable market, handling more than 200 million kilograms of produce a year. But some brokers expect its lack of liquidity to limit price movement.

Scott said initial activity was certainly more likely to come from the buy side than the sell side. But it was not correct to assume there were no potential sellers.

Scott and ABN have handled most of Turners and Growers' unlisted trading during the past several years.

No new shares have been created for the float as Turners and Growers is not seeking to raise any new capital.

Ron Brierley's investment company Guinness Peat Group (GPG) holds a 78.3 per cent stake. Another 10 per cent is held by banana company Bonita. Most of the rest of the stock is controlled by about 1000 fruit and vegetable growers.

GPG has hinted in the past that it might sell part of its stake, but New Zealand director Tony Gibbs said there were no short-term sale plans on the horizon.

"It's possible at some stage, but we certainly won't be putting any shares on the market tomorrow."

Turners is expected to list at about $3.10 per share, giving it market capitalisation of about $220 million and putting it among New Zealand's top 50 listed companies - similar in size to Hallenstein Glasson.

However, it will not be part of the NZX top 50 index because it does not have $150 million-worth of liquid stock.

As well as the domestic business, it owns Enza - which exports nearly 40 per cent of all New Zealand apples.

Gibbs said Turners and Growers did not have huge margins and was subject to seasonal ups and downs in what was a tough industry.

But it handled enormous volumes and had revenue of about $600 million.

Its net profit for the year to 2003 was about $12 million.

Gibbs said the company would look to raise capital next year through the issue of capital notes.

It was too early to say how much it would look to raise. "Probably no more than $100 million," he said.

That money was likely to be used to pay down some of its $40 million debt and for further expansion.

Plans to spin off and list EnzaFoods - Enza's juice business - would add to the appeal for investors.

Growing concern

New Zealand's largest domestic produce company.

Founded in 1897 by orchardist Edward Turner.

Owns Enza, the country's largest apple exporter.

Last traded off market at $3.10 per share.

Market capitalisation of $221 million.

GPG holds a 78.3 per cent stake.