MARKET CLOSE: NZX 50 market cap below NZ$30 bln, Wrightson falls

Friday 20th February 2009

New Zealand shares fell for a fifth straight day, pushing the NZX 50 Index's market capitalisation below $30 billion for the first time this year, as PGG Wrightson and NZ Farming Systems Uruguay tumbled.

The NZX 50 fell 40.246, or 1.5%, to 2,576.68, the lowest in almost five years. Within the index, 32 stocks fell, nine rose and nine were unchanged. Turnover was $72.9 million.

NZ Farming Systems tumbled 29% to a record low 40 cents and PGG Wrightson slumped 28% to 59 cents amid speculation they may require more capital as debt repayments loom amid the threat of potentially costly litigation for Wrightson over its failed plan to buy half of Silver Fern Farms.

"There are too many unknowns and I don't really want to know," said Alan Moore, who helps manager $250 million at Milford Asset Management. Wrightson's offer of $10 million "has almost been laughed at by Silver Fern," he said. "Debt could be a lot higher if the court situation requires them to find more."

Sky Network Television fell 5.7% to $3.95 after the nation's biggest pay-TV company posted a 17% drop in first-half profit to $42.6 million on costs of its new high definition platform and weakening advertising revenue at Prime.

Fisher & Paykel Appliances declined 4.8% to a record low 59 cents on continued speculation about its plans to raise capital, which the manufacturer has flagged this without giving details.

Nuplex Industries fell 3.3% to $1.45, extending its slide since yesterday announcing it was in talks with its banks to loosen its senior debt cover ratio requirements, which it was in danger of breaching.

"Both these companies are going to survive in my opinion but we need to know what problems Nuplex has got with its bank covenants," Moore said.

Telecom, the biggest company on the NZX 50 Index, fell 4.8% to NZX$2.38. Cavalier fell 1.7% to NZ$1.72 after the carpet maker posted a 7% drop in first-half profit to NZ$7.4 million.

Electronic and mobile payments system vendor ProvencoCadmus tumbled 27% to 4 cents after announcing it would roll over its capital notes for a further 12 months, paying 2% interest, down from the 9.25% offered when first issued in 2006. Noteholders will be offered the option of converting the notes to ordinary shares.

Fisher & Paykel Healthcare edged up 0.9% to NZ$3.36 as the New Zealand dollar weakened to about 50.38 U.S. cents, helping boost the value of U.S. sales which account for 80% of revenue.

In Sydney, the S&P/ASX 200 Index fell 1.6% to 3395, as stocks dropped across the Asia Pacific region as more nations fretted about the rise in bad debts. National Australia Bank fell 3.6% to A$17.74, leading bank stocks lower on renewed fears that U.S. lenders may require more bailouts and after Goldman Sachs cut its recommendation on NAB.

ANZ Bank fell 1.9% to A$12.36 after saying bad debts are spreading. Rio Tinto, the world's third-biggest mining company, fell 3.3% to A$50.09 after a report it was postponing annual talks on iron ore prices with Chinese steel mills.

Qantas Airways fell 3.7% to A$1.69 after Moody's Investors Service cut its long-term unsecured rating to Baa2 from Baa1, saying its credit strength has been hurt by high debt levels and an industry-wide downturn.

Caltex Australia fell 8.8% to A$8.76 after reporting a 58% drop in full-year operating profit on plant shutdowns and waning demand for fuel.

Businesswire.co.nz

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