Stocks to watch: Contact to sell bonds, Pike shares halted

Monday 2nd 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: The US economy had its biggest slump since 1982 in the fourth quarter, shrinking at a worse-than-expected annual pace of 6.2% as consumer spending dwindled and exporters shipped fewer goods. Citigroup plunged 39%, leading the Dow Jones Industrial Average down 1.6%.

Contact Energy (CEN): The biggest utility on the NZX 50 today announced plans to raise at least $300 million by selling five-year notes that pay 8% interest. The notes, which are being sold to retail, or individual investors, are rated BBB by Standard & Poor's. The funds will be used to pay debt and finance new power plants. Contact traded at $5.95 on Friday and have fallen 19% this year.

Guinness Peat Group (GPG): The investment company chaired by Ron Brierley on Friday posted a full-year loss as it wrote down the value of its portfolio and its Coats threadmaker unit was hit by the economic downturn. The downturn may limit GPG's ability to make some sort of capital return to shareholders in 2010 that was to coincide with Brierley's retirement as chairman. Shares of GPG fell 13% to 60 cents on Friday.

ING Property Trust (ING): The Accident Compensation Corp. ceased to be a substantial shareholder of the property investor, reducing its stake to 4.99% from 5.55%, according to a filing today. ING's units traded unchanged on Friday at 58 cents and have fallen 41% in the past 12 months.

NZ Farming Systems Uruguay (NZS): The stock soared 38% to 51 cents on Friday and Wrightson, which has the management contract for the dairy farm developer, jumped 15% to 91 cents. Wrightson last week maintained its interim dividend at 5 cents a share, even after posting a $32.8 million loss, and said it has extended the term of its loans.

Pike River Coal (PRC): The shares fell 2.4% to 80 cents on Friday, before being halted pending an announcement. The shares have fallen 11% since February 19 when the coal miner reported a rock fall had blocked a ventilation shaft critical to venting mine air and gases to the surface and providing fresh air.

"The timing was unfortunate coming just as Pike River was about to commence its ramp-up of coal production," the company said. It posted a $9.6 million interim loss, reflecting mine development costs prior to any coal being extracted and now has to find the funds for remedial work.

Port of Tauranga (POT): Rival operator Ports of Auckland last week said it has withdrawn from plans to seek an alliance with Tauranga and will no longer seek to acquire the company's container business because of a lack of positive response. The shares rose 1.3% to $5.40 on Friday.

By Jonathan Underhill

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