MARKET CLOSE NZ shares fall as Chorus battles regulation, Meridian dips
Dec. 2 (BusinessDesk) – New Zealand shares fell as Chorus, fighting price controls, sank to a record low and other
utilities at risk of regulation, including Meridian Energy, declined.
The NZX 50 Index declined 2.621 points, or 0.1 percent, to 4792.329. Within the index, 21 stocks fell, 15 gained and 14
were unchanged. Turnover was $108 million.
Chorus dropped 5.6 percent to $1.44, the lowest close since it was spun off from Telecom in late 2011. The company today
filed papers in the High Court challenging the way Commerce Commission set prices on its regulated copper lines, and
applied to the regulator for a final pricing principle review of the regulator’s decision. Prices are to be cut 23
percent.
“We will see some logic come back into the Chorus debacle,” said Grant Williamson, a director at Hamilton Hindin Greene.
“This is the first step. Chorus just has to ensure it can get an acceptable return off its investment. Unfortunately
it’s going to be a very drawn-out affair.”
Prime Minister John Key, at his post-Cabinet press conference, appeared to hold out the prospect of a contract price
renegotiation to compensate Chorus for the loss of earnings it had expected to use to build its share of the national
UFB network.
Telecom, which is a customer of Chorus, buying access to its copper lines, was unchanged at $2.30.
Meridian’s instalment receipts fell 1.5 cents to 97 cents, below the price of the government’s selldown in October of $1
upfront. Vector, which is under threat of the credit rating downgrade by Standard & Poor’s, fell 1.1 percent to $2.62.
“We’re starting to see some investors sell purely on the environment of regulation,” Williamson said. “A number of
foreign and local investors are reducing exposure to companies with risk of regulation.”
Kathmandu, the outdoor clothing chain, fell 3.5 percent to $3.55 in a mixed session for retailers. Michael Hill
International dropped 2.1 percent to $1.43 while Hallenstein Glasson Holdings gained 0.7 percent to $4.17.
Fonterra Shareholders’ Fund rose 0.3 percent to $6.50. Fonterra chief executive Theo Spierings told unitholders at their
annual meeting today that the company had failed to reach a commercial agreement with Danone over the cost of the whey
protein recall, though its contract doesn’t imply any liability should a legal challenge follow.
MightyRiverPower was unchanged at $2.10. The power company is shutting down its largest geothermal power station, the
140 Megawatt Nga Awa Purua installation, to perform temporary repairs after finding geothermal fluids have damaged the
three-year-old unit.
“The current estimated repair and turbine blade replacement cost to the joint venture is expected to be about $15
million in the 2015 financial year,” the company said.
Vital Healthcare declined 1.6 percent to $1.27 after shedding its 1.975 cents a share interim dividend.
(BusinessDesk)