MARKET CLOSE: NZ shares fall as market digests 53% of Contact Energy

Tuesday 4th August 2015

New Zealand shares fell, with the NZX 50 Index retreating from a record high, as investors sold down their holdings to participate in the bookbuild for the 53.1 percent of Contact Energy being offloaded by Origin Energy at a discount. MightyRiverPower and Spark New Zealand were among decliners.

The S&P/NZX 50 Index fell 24.09 points, or 0.4 percent, to 5933.76. Within the index, 33 stocks fell, nine rose and eight were unchanged. Turnover was $155 million.

Contact shares remained suspended, having traded last on Monday at $5.02 and the sale price for the Origin stake set at $4.65 a share.

"Who would have thought in the last five years that Contact Energy would be offloaded by Origin at a price of $4.65?" said Grant Swanepoel, head of research at Craig's Investment Partners. "It's not a desperate price, but it's certainly a willing seller."

"I would be surprised if knowledgeable investors were not looking for a piece of this at this price," he said. The retention of Origin secondee Dennis Barnes as chief executive, with Barnes becoming a Contact employee, was a major plus. "That would have been my one concern: if Dennis went with the sale," Swanepoel said.

Prices for the most liquid stocks on the bourse, such as Spark New Zealand, fell as investors organised to fund purchases of Contact stock, with some 389.3 million shares worth $1.8 billion to be laid off in New Zealand and offshore. Spark dropped 1.7 percent to $2.945. Contact is planning to restore its ASX listing, abandoned after Origin came onto the register in 2003.

Other energy stocks were also down slightly, losing some of the gains most made the day before the Contact announcement, when the continued operation of the Rio Tinto-controlled aluminium smelter at Tiwai Point was confirmed, removing a major risk for investors. Mighty River Power shed 3.1 percent to $2.79 and TrustPower fell 1.9 percent to $7.75.

Meridian Energy fell 1.3 percent to $2.29 and Genesis Energy dropped 1.1 percent to $1.75.

Fonterra Shareholders' Fund fell 2.3 percent to $4.69 ahead of the GlobalDairyTrade auction overnight and Fonterra's board meeting at the end of the week, which is almost certain to include revised guidance for milk payouts and dividends.

Air New Zealand fell 1.5 percent to $2.65 and Port of Tauranga declined 1 percent to $17.52. Orion Health Group, the hospital management software company, fell 1.5 percent to $3.91.

Tourism Holdings, the campervan rental company, rose 1 percent to $1.95. The company said today it will remain listed and says it has the balance sheet strength to take on debt to fund acquisitions. The announcement comes after the Auckland based company hired First NZ Capital in April to help with a review of its capital structure.

VMob rose 2.9 percent to 36 cents. The NZAX listed mobile technology company says it has delayed a planned listing on the ASX because of on-going commercial negotiations and so management can focus on current sales momentum.

Coats Group, the company that grew out of diversified investor Guinness Peat Group, rose 1.6 percent to 65 cents. The company turned to a first half loss after a writedown on the sale of its unprofitable EMEA crafts business. The UK based threadmaker reported a loss of US$48.1 million, compared to a profit of US$15 million, a year earlier.

BusinessDesk.co.nz

Comments from our readers

No comments yet