Stocks to watch: Allied Farmers, Mercer, Goodman Fielder

Friday 1st October 2010

Allied Farmers' financial statements have been brought into question by auditors, Mercer is mulling over a $9 million share issue to investors and private placement, while Goodman Fielder continues to look at raising $250 million through a new NZX-listed bond, in order to pay down debt.

Allied Farmers (ALF): The embattled finance company, which filed its annual report a day late to the NZX, has had its financial statements brought into question by auditors. PricewaterhouseCoopers said it was unable to verify the company would be able to generate sufficient cash flows from its various funding initiatives due to a lack of audit evidence. Shares were unchanged yesterday at 3.6 cents.

Mercer Group (MGL): The stainless steel products manufacturer part-owned by Allan Hubbard, is mulling a $9 million share issue to investors and private placement as it looks to pay down debt. Mercer has a conditional agreement with an institutional investor for the capital raising, according to its annual report. The cash will be used to repay debt and boost working capital. The stock last traded on June 30 at 25 cents.

Goodman Fielder (GFF): The dual-listed food ingredients manufacturer is looking to raise as much as $250 million in a new NZX-listed bond to repay bank debt. The company said it's considering making an offer of up to $175 million of senior unsecured fixed rate bonds, with the ability to accept $75 million in oversubscriptions, and will decide on what interest rate it will pay before the offer is launched. Its facility with its lenders of A$700 million expires in November, and it's already raised A$350 million from private investors in America. The bond is expected to open late next month. Shares were unchanged yesterday at $1.81.

Pike River Coal (PRC): The coal mine developer said yesterday that it had agreed terms with 29% owner NZ Oil & Gas for a $25 million short-term working capital facility that allows it to complete mine development. The facility is repayable on December 15. The shares fell 0.9% to $1.13 yesterday. NZ Oil & Gas (NZO) fell 1.6% to $1.27.

Rakon (RAK): The crystal timing device manufacturer's record July sales and improved plant performance are expected to be offset by price competition as the smartphone market matures, according to investment advisory firm Craigs Investment Partners, quoted on the ShareChat website. The company is expect to meet its consensus earnings before interest, tax, depreciation and amortisation for the year ending March 2011 of $25 million and $30 million, up from $7.2 million the previous year, though still a marked down number. Craigs rated the stock at "hold". Shares fell 2.4% yesterday to $1.24.

Telecom (TEL): Chief executive Paul Reynolds gave a bearish short-term outlook for the company when he addressed shareholders at their annual meeting yesterday but failed to give any specific forecasts. The shares fell 2.9% yesterday to $2.02.

Tourism Holdings (THL): The campervan rental company announced today that it has settled the sale of its transport and tourism businesses in Fiji to local interests for $1.8 million, which will be used to settled debts. The company's Tourist Transport (Fiji) and Feejee Experience units are to be merged with a local company called Coral Sun (Fiji), creating the island nation's largest tourist transportation operator. Shares rose 3.7% yesterday to 84 cents.

Themes of the day: US stocks were mixed overnight as some investors chose to book profits after the best September in more than 70 years, as encouraging data continued to lift sentiment. The Standard & Poor's 500 Index edged up 0.01% to 1144.68, having advanced 8.8% in the month. European shares fell for the fourth straight session, with investors locking in profits after the best quarterly gains in a year. The New Zealand dollar fell to 73.46 US cents from 73.70 cents overnight, as positive US economic tidings soothed concerns about further quantitative easing by the Federal Reserve and stoked appetite for the greenback.

Businesswire.co.nz

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