Investing

Business Wrap: Huge Airport deal

Auckland Airport launches a $1.2b capital raising, but Auckland Council pulls out; Marsden Point cuts production again as Covid-19 hits fuel demand; Kiwi Property cancels dividend too

Down day: The NZ sharemarket lost ground yesterday following the announcement of a second major capital raising in as many days and the prospect of more to come left investors on edge. The NZX50 closed down 1.7 percent at 9764, while across the Tasman the ASX200 finished the day strongly and near its highs for the session gaining 4.3 percent to close at 5287.

Shoring Up: Last week it was Kathmandu. This week it was Auckland International Airport wanting investors to stump up more money as part of a major capital raising. Seeking $1.2 billion, including a $1b fully underwritten institutional placement and a $200 million share purchase plan at $4.50 per share, a 10.7 percent discount to last Friday’s closing price, retail investors face a dilemma.

Shall I go or should I stay now? Buy in now to the capital raise or wait for the shares to become cheaper if markets are still to bottom out and the borders remain closed for longer than anticipated.

Halted: Auckland Airport shares were halted for the placement through a bookbuild from institutional investors. Existing shareholders in New Zealand can subscribe for up to $50,000 of new Auckland Airport shares . The price is expected to be announced on Thursday when shares resumed trading.

Count us out: Analysts and fund Managers spoken to by Newsroom believe the capital raise will be well supported by cashed-up institutional investors seeking yield, though Auckland Airport’s major shareholder, Auckland Council says it won’t be participating. Mayor Phil Goff told Newsroom the Council has “…other more important spending priorities facing the city right now.”

Watered down: This will mean the Council’s current 22 percent holding is likely be diluted to around 18 percent.

Go slow: Refining NZ is to extend its reduced production mode by a further two months to the end of August because of COVID-19 travel and transport restrictions hitting demand for fuel. The owner of the Marsden Point refinery said it expected further production reductions in response to the reduced demand for transport fuels. Refining NZ shares closed down 3.5 percent at 84c.

Another one: Kiwi Property Group is the latest company to announce that it is cancelling its dividend. The news will be a disappointment for retirees and others on fixed incomes who have sought out the property investment company for its reliable earnings and conservative gearing. Cash is king: The company said that was cutting costs and had put all non-essential capital expenditure projects on hold.

Affordable pay cuts: The Board of Directors, Chief Executive Officer and Executive Team have all agreed to a 20 percent reduction in pay, while in parallel, employee salary increases have also been frozen. Kiwi Property Group shares closed down 7.2 percent at 83.5c

Shareholder revolt: Retail investors in Hong Kong have threatened legal action against HSBC and will attempt to force the bank to hold an extraordinary general meeting, after it was pressured by UK regulators to cancel its dividend due to the coronavirus crisis.

First time: It’s the first time in 75 years the iconic Hong Kong institution will not pay a dividend which will cause additional financial stress for many low-income workers in particular who rely on the dividend.

United we stand: Individual HSBC shareholders banded together to try to get the 5 percent of outstanding shares required to secure an EGM.

Decimated: Flight Centre announced it would permanently shut 428 stores in Australia and New Zealand by the end of July to slash costs, while also raising $900 million in fresh equity and debt to get it through the coronavirus pandemic. The ASX-listed travel group yesterday announced a $700 million equity capital raising, consisting of a $282 million placement to institutional investors and a $419 million 1-for-1.75 entitlement offer to existing shareholders, both at $7.20 a share: a 27 percent discount to the last closing price on 19 March.

Crash landing: Flight Centre shares bottomed out at the end of GFC in March 2009 at $3.74, reached an all-time high of $67.49 in July 2018, and were still trading at $44 as recently as January this year before the coronavirus outbreak led to a dramatic fall in international flights and its share price.

More stimulus: Singapore is to undertake a third round of economic stimulus with another $5.1 billion Singapore dollars ($NZ6 billion) being allocated to soften the economic damage from the ongoing coronavirus outbreak. In total, Singapore has set aside $60 billion Singapore dollars ($NZ70.6 billion), accounting for around 12 percent of the country’s GDP.

Cash for all: The measures include increased wage subsidies for all companies in April, waivers on rental and foreign worker levies for businesses and a cash pay-out of $600 Singapore dollars ($NZ706) each for all adult Singaporeans

Weird conspiracy: Several mobile phone towers in the U.K. have been set on fire and engineers harassed amid the spread of online conspiracy theories that link 5G technology with the coronavirus pandemic. Video footage circulated online last week showing a mast torched in the English city of Birmingham. Meanwhile, a clip also surfaced on Twitter showing a woman harassing telecoms engineers laying 5G fibre-optic cables claiming the technology “kills people.”

5G falsely blamed There are floods of posts on Facebook claiming the coronavirus outbreak was caused by 5G, the fifth generation of mobile internet. Many of the claims centre on the idea that the virus originated in Wuhan because the Chinese city had deployed 5G networks last year...

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