Forum Archive Index - May 2001

["Peter Maiden" <pmaiden@xtra.co.nz>]

I suppose the comments I made earkier about RMG issuing shares also applies to TEL. The reasons for the additional shares are no doubt different but a dilution of current shareholders interests

 

 

The news from Reuters just in is

 

Thursday 17 May 5:59 PM

 

Share issue talk weighs on Telecom NZ-broker

WELLINGTON, May 17 (Reuters) - The share price of Telecom Corp of New Zealand came under pressure on Thursday amid speculation that it was trying to make a NZ$500 million private placement of shares, a senior broker said.

Market sources and fund managers said Telecom was seeking to issue 88 million shares to Australian institutional investors at around NZ$5.63 per share -- a five percent discount to the current market price for the stock.

Telecom NZ shares, accounting for 25 percent of the NZSE-40 Index, closed down one cent at NZ$5.92, on a day when the overall index added 11 points or 0.54 percent to 2,084.47.

Telecom refused to comment on the speculation, but one senior New Zealand broker who declined to be named said the talk was weighing on the stock.

"It certainly has done some damage to where the Telecom share price would otherwise be," he said.

"On a day like today it would be a fair assumption to say they'd be up sort of 10 to 15 (cents)."

"We have spoken to parties in Australia who were approached and asked whether they wanted to participate in the placement, so something definitely did happen last night," the broker said.

Another broker said: "We have it on fairly good authority...they definitely tried and definitely failed."

Telecom spokesman Martin Freeth said the company had a broad range of options for funding, including an equity raising.

"We've got no transaction in place at the present time...we'd never really comment on speculation about the timing or method of any specific intentions to raise new equity," he said.

Analysts said it would be logical for Telecom NZ, which had total liabilities of NZ$6.965 billion as at March 31 with long-term debt of NZ$2.442 billion, to try to raise capital.

Its current expansion plans include a NZ$1 billion roll out of a new generation CDMA mobile phone network in New Zealand, and A$400 million for a third generation mobile phone project in Australia.

(c) Reuters Limited 2001

REUTER NEWS SERVICE