MARKET CLOSE: Wrightson gains on debt renewal, Nuplex drops

Thursday 26th February 2009

Stocks were mixed, with the NZX 50 Index edging lower, after Nuplex Industries posted a slump in earnings and PGG Wrightson said it won support from its banks to extend loan facilities.

The NZX 50 fell 2.387, or 0.1%, to 2497.433. Within the index, 18 stocks fell, 20 rose and 12 were unchanged. Turnover was a tepid NZ$52 million.

Nuplex dropped 11% to NZ$1.20 after posting a 76% decline in first-half profit and saying it is considering a rights offer to bolster its balance sheet. The specialty chemicals and resins maker is in talks with its banks to ease conditions of its loans, which it was in breach of as at Dec. 31.

Nuplex's senior debt cover ratio was at 3.46 versus an agreed limit of 3. The company's market value is NZ$95 million versus debt of NZ$371 million.

"Unfortunately for New Zealand's capital markets there's a few stocks with very similar concerns," said James Lindsay, equities manager at Tyndall Investment Management. "Markets are softening, combined with a debt position, like Nuplex, which breaches their covenants. It's a combination of a couple of perfect storms for them."

Fisher & Paykel Appliances was unchanged today at 50 cents, having tumbled 63% this year. The company today said it is in talks with its banks to ensure it doesn't breach lending covenants as at March 31, and is mulling raising new equity and selling property to bolster it balance sheet.

Carpet Market Cavalier Corp. fell 3.6% to NZ$1.35 while Fletcher Building dropped 1.9% to NZ$5.25.

Wrightson jumped 9.7% to 79 cents, leading the NZX 50 higher, after the rural services company said its banks had agreed to refinance about $475 million in loan facilities, with the company having drawn $410 million as at the middle of this month. The refinancing buys it a 21-month window to get pay down its debt.

"It looks like they have done a pretty good job to get their funding lines extended," Lindsay said.

Air New Zealand climbed 1.2% to 82 cents after reporting a 79% slump in half-year profit as falling demand and rising fuel prices cut into the airline's margins.

Net profit plummeted to $24 million for the six months to December 31, from $115 million a year earlier, the company said in a statement.

Australia & New Zealand Banking Group rose 4.7% to NZ$4.70 after announcing plans to cut dividend payments by 25% this year and may raise more capital as bad debts rise.

"I support management teams that are doing things in the best long-term interests of the company," Lindsay said. "It seems pointless to be paying out massive dividends then seeking a rights issue."

Businesswire.co.nz

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