MARKET CLOSE: Wrightson sinks as offer spurned, THL falls

Wednesday 18th February 2009

Shares fell for a third day, after Silver Fern Farms spurned PGG Wrightson's offer to settle an unconditional deal and Tourism Holdings Ltd. posted a loss and suspended dividends.

The NZX 50 Index fell 51.617, or 1.9%, to 2621.005. Within the index, 42 stocks fell, three rose and five were unchanged. Turnover was NZ$92 million.

Wrightson tumbled 18% to 98 cents, a six-year low, after Silver Fern rejected as too low a NZ$10 million offer to settle a failed merger. Wrightson had said it would take the cost as a first-half charge and the prospects of having to fund a bigger compensation payment raised concern about the rural service's balance sheet strength.

Wrightson last year won support from Silver Fern's farmer-shareholders to acquire half the company for NZ$220 million and improve its procurement operations. It failed to settle when the deal went unconditional as turmoil in financial markets choked its funding.

"They miscalculated the global environment," said Paul Richardson, who manages NZ$150 million at BT Funds Management in Auckland. Wrightson "is one of the companies that look like they've pushed a bit too close to the edge. They're on people's worry list."

Tourism Holdings slumped 14% to 56 cents after the campervan operator posted a first-half loss of NZ$265,000 and omitted its first-half dividend. Sales fell 7% as the global economic slump prompted tourists from the U.K. and Germany to stay away.

Fisher & Paykel Appliances dropped 11% to 64 cents, rounding out a third day of a rollercoaster ride since announcing it won't make a profit and may need to raise new capital as debt levels rise.

The appliance manufacturer, singled out by Prime Minister John Key as an iconic company that may warrant state aid, has drawn criticism for its decision to announce it was pondering raising more capital without having the plan in place.

"If they're indicating they are capital raising then analysts work out how much they need to raise and how much the share price will be diluted by it," Richardson said. "You would have to ask really what the board was thinking."

Richardson said F&P Appliances' weakened position had "sharpened the focus" among investors that New Zealand isn't immune to the global downturn.

Other manufacturers with high fixed costs and exposure to a slowing global economy joined the rout today.
Nuplex Industries, a specialty chemicals and resins maker, tumbled 10% to NZ$1.85 adding to a 26% slump this year. The company announced on Feb. 2 that earnings would miss its forecasts because of a downturn in demand in Europe.

Skellerup Industries fell 1.4% to 70 cents after the rubber goods manufacturer cut its full-year profit forecast in anticipation of weaker demand at its industrial unit, which is exposed to the auto industry. First-half profit rose 13%.

Children's clothing retailer Pumpkin Patch fell 11% to 80 cents and Rakon, which makes components for navigation systems, sank 13% to 75 cents.

Taylor's Group Ltd. rose 0.8% to NZ$1.23 after the laundry company said sales rose NZ$1 million to NZ$35.3 million on the first half, pushing the company back into profit, at NZ$1.8 million.

In Sydney, the S&P/ASX 200 Index fell 1.9% to 3397. Westpac Banking Corp, that nation's biggest lender, fell 2.4% to A$16.37 after announcing profit fell 1.2% to A$1.2 billion in the first quarter and a five-fold increase in bad debt provisions.

BHP Billiton fell 5.6% to A$29.98 after prices of oil and metals declined. CSR, Australia's No. 2 building products company, tumbled 15% to A$1.26 after warning that profit may fall by more than a third as demand dwindles.

Fortescue Metals Group jumped 12% to A$2.98 after the Herald Sun newspaper reported that China Investment Corp. and Anglo-American Plc are in talks to acquire shares in the company. Fortescue appointed JPMorgan Chase as an adviser though it was cagey about its activities, saying it had been approached by a number of companies.

In Japan, the Nikkei 225 Index declined 1.5% to 7528.17. Inpex Corp., Japan's biggest oil explorer, fell more than 3% after the price of crude oil tumbled below US$36 a barrel. Toshiba fell 5.6%.

Businesswire.co.nz

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