Stocks to watch: Nuplex slides, Dorchester hotel purchase

Wednesday 4th 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: Federal Reserve Chairman Ben Bernanke said the US may have to shell out more than the US$700 billion in aid earmarked for the financial sector to stabilise markets and ensure the world's biggest economy revives. "Without a reasonable degree of financial stability, a sustainable recovery will not occur," Bernanke said in testimony to the Senate Budget Committee. "More needs to be done."

Australia kept its benchmark interest rate unchanged at 3.25% yesterday and is scheduled to release fourth-quarter gross domestic product figures today. The GDP report may show growth in New Zealand's biggest export market was 0.1% in the final three months of 2008.

Dorchester Pacific (DPC): The finance company yesterday announced the completion of the purchase of the Goldridge Hotel in Queenstown for $8 million. The company's Dorchester Finance unit had held a second mortgage which secured a loan with a carrying value of $6 million.

The purchase "furthers our strategy of preserving the value of Dorchester Finance's interest as security holder in those cases where we believe an orderly realisation of property over time should produce a better outcome for stakeholders," it said. The shares last traded on February 20 at 4.5 cents.

Guinness Peat Group (GPG): The Accident Compensation Corp. increased its stake in the investment group to 57 million shares, or 4.03% of the company, from 44 million, or 3.1% in August. The shares fell 1 cent to 54 cents.

Metlifecare (MET): The resthome operator yesterday said it expects to benefit "in due course" from a revival of the property market. The outlook comment was in the company's prospectus for its $37.8 million issue of new shares. The shares last traded at Feb. 27 at $1.80.

Nuplex Industries (NPX): The shares fell 12% to $1.04 yesterday and have slumped almost 50% in the past 10 days. It may be in breach of banking covenants, according to a statement last week. The specialty chemicals maker told analysts yesterday it was awaiting agreement from all its banks to be in breach of its senior debt to EBITDA ratio. It was at 3.1 as at December 31, adjusting for foreign exchange impact. The actual was 3.46 versus a target of below 3.

Pike River Coal (PRC): The coal miner dropped 10% to 72 cents yesterday after announcing an offer of shares backed by 30% owner New Zealand Oil & Gas. The funds will bolster working capital after a rock slide disrupted coal production.

Smartpay (SPY): The shares soared 100% to 1.4 cents yesterday after the payment processing system company said it has been operating cash-flow positive for the past two months and expects to be EBITDA profitable "in the short term."

By Jonathan Underhill

Comments from our readers

No comments yet