Stocks to watch: Tower ruling, F&P Appliances loan reprieve

Monday 16th March 2009

The following stocks may be active on the New Zealand exchange after developments since the close of trading Friday.

Themes of the day: Shares edged higher on Wall Street on Friday, rounding out their best weekly gains since November as banks rebounded. G-20 finance and central bank chiefs pledged to bolster the International Monetary Fund's resources to battle the worst economic slump since the 1930s.

Eastern Hi Fi Group (EHF): The home appliance chain posted a $3.4 million full-year loss after sales dropped 41%, reflecting waning demand in a slumping market and discounting. Included in the loss were costs to close unprofitable stores, the loss of the Denon brand and other one-time costs, it said. The shares haven't traded since Sept. 26, when they were at 10 cents.

Fisher & Paykel Appliances (FPA): The manufacturer whose shares have tumbled 60% this year said it had gained waivers from its banks and agreed to a short-term $80 million loan facility. The new funding facility runs through April 30, helping the company meet temporary peak funding requirements, it said in a statement on Friday. The company gained a waiver to its debt cover ratio and interest cover ratio covenants for the term of the interim facility. The shares fell 1.9% to 51 cents on Friday.

New Zealand Oil & Gas (NZO): OPEC ministers met in Vienna yesterday to debate strategy for underpinning the price of crude oil. Saudi Arabia, the cartel's largest producer, urged members to meeting output cuts agreed to last year but as yet only partially met. Crude oil for April delivery rose as much as 2.4% to US$48.14 a barrel on the New York Mercantile Exchange on Friday and settled at US$46.25.

Nuplex Industries (NPX): The specialty chemicals manufacturer gained approval from its banks to amend terms of its loan covenants and announced plans to raise $110 million selling shares to help repay debt. The banks agreed to loosen the terms of its senior debt cover ratio after imposing conditions capping dividend payments at 60% of net profit, applying any assets sales proceeds over $2 million to debt repayment, and taking a general security over the company's Australasian assets. Its stock has slumped over 80% in the last 12 months to $1.07.

Pike River Coal (PRC): The coal miner tapping investors for more funds to tide it over until coal sales begin climbed 6.7% to 80 cents on Friday. The coal miner has dismissed a prediction by UBS that coal prices could plummet to as low as US$85 per metric ton this year, BusinessDay reported. Mines general manager Peter Whittall said the industry was forecasting prices between US$120 and US$150.

Rakon (RAK): The manufacturer of navigation system components, which counts US and European companies among its clients, surged 19% to $1.15 on Friday, trimming its slide this year to 26%.

Tower (TWR): The insurer has retained the right to sell insurance to customers of ANZ National Bank and ING (NZ) after the lender sought a court ruling to prevent policies being renewed while it lined up a rival underwriter, Vero Insurance. The High Court rejected a claim from ANZ and ING, according to a statement from Tower managing director Rob Flannagan. The shares fell 3% to $1.30 on Friday.

By Jonathan Underhill

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