Stocks to watch: Air NZ strike, Tower bond sale

Wednesday 25th March 2009

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

Themes of the day: Stocks on Wall Street fell, paring some of the previous day's surge. The Federal Reserve said it will start buying Treasury bonds under its US$300 billion plan to spur economic growth and free-up credit markets tomorrow. China called on the IMF to create a new "super-sovereign reserve currency," a sign that confidence in the greenback is waning as the Federal Reserve prepares to buy Treasuries.

Air New Zealand (AIR): Flight attendants working in the airline's Zeal 230 subsidiary are threatening to strike during the peak Easter long weekend, which could disrupt flights for thousands of travelers. Some 250 members of the Engineering, Printing and Manufacturing Union are considering the stop-work, affecting flights across the Tasman and on Pacific routes. The shares rose 2.3% to 90 cents yesterday.

Contact Energy (CEN): National grid operator Transpower said energy demand has dropped 3%, excluding the impact of the closed potline at the Tiwai Point aluminium smelter, BusinessDay reported. Shares in the largest listed utility rose 0.5% in trading yesterday.

Fisher & Paykel Appliances (FPA): The whiteware manufacturer which may have to raise more share capital as the value of overseas debt rises, jumped 8.1% to 40 cents as the kiwi dollar rose.

Nuplex Industries (NPX): The specialty chemicals maker surged 28% to 68 cents as the New Zealand dollar advanced, reducing the value of its overseas debt that had contributed to a breach of its bank covenants. The manufacturer is planning a 7-for-1 share issue at 23 cents apiece, raising $132.8 million.

Sanford (SAN): The fish exporter is hurt by a higher New Zealand dollar, which erodes the value of its overseas sales. The shares fell 2.4% to $5.60 yesterday.

Telecom (TEL): The Commerce Commission has knocked back the latest offer from the largest listed company and its rival, Vodafone Group, over mobile termination rates. "The Commission expects that any revised undertakings will need to offer significantly lower mobile termination rates before the Commission could consider recommending that the Minister accept them," said outgoing chair Paula Rebstock. The stock fell 0.4% to $2.31 yesterday.

Tower (TWR): The insurer and funds manager yesterday closed its bond sale, raising $81.7 million. That's less than the $100 million it was prepared to sell, with oversubscriptions, as the company struggled to lure investors with an 8.5% interest rate on the unrated debt securities. Tower rose 4.8% to $1.32 yesterday.

By Jonathan Underhill

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