NZ sharemarket falls as investors look for cash for airport capital raise

Investors scrambled to raise money and participate in Auckland International Airport’s massive $1.4 billion capital raise which weighed on the New Zealand sharemarket.

Monday, September 16th 2024, 6:30PM

by BusinessDesk

It is the country’s largest corporate equity raising outside of an initial public offering when a company is listed on the sharemarket. Auckland airport and Air NZ had earlier raised $1.2b each in April and May 2022 to strengthen their balance sheets following the covid pandemic.

The S&P/NZX 50 Index fell 128.16 points or 1% to 12,704.39. There were 62 gainers and 79 decliners over the whole market with the NZX saying at 6pm there were volumes of 33.6 million share transactions worth $100.9m.

Auckland International Airport went into a trading halt after announcing it was making an underwritten equity raising of $1.2b at $6.95 a share. The company last traded at $7.54, and is also raising a further $200m through a retail offer to shareholders at a slightly more discounted price.

The money will initially be used to repay the $150m October 2024 bond and $100m of unhedged drawn loan facilities, and help fund the airport’s $6.6b capital investment programme.

Auckland airport also told the market it has signed a contract with Hawkins, worth $800m, to build the new domestic terminal as part of an integrated development with the international terminal services.

Matt Goodson, managing director of Salt Funds management, said the market was aware that Auckland airport needed to raise equity but it came a little earlier than people expected.

“It was certainly a fundraising day on the local market and I think the airport will get its capital raising away given the discount (to the share price),” he said.

“It’s a little bit tricky for one party, Auckland Council (which has an 11% shareholding). I don’t know whether they will participate in the raising – they didn’t last time.”

Goodson said the sheer size of the raising will have index implications, and Auckland airport will likely increase its weighting on the NZX 50 as there will be more shares on issue.

Looking for cash

Leading energy stocks Meridian and Mercury came under selling pressure on the fundraising day, falling 24c or 3.76% to $6.14 and 20c or 3.25% to $5.95 respectively at 5.23pm.

Contact was down 9c to $8.21. Cancer diagnostic firm Pacific Edge surged 2.1c or 19.27% to 13c. Goodson said this was a delayed reaction to last week’s announcement that the company was very hopeful its Cxbladder testing will be included in the American Urological Association’s standard of care guidelines.

The association’s decision will be helpful in the Novitas outcome over whether Pacific Edge should continue to receive Medicare payment, Goodson said. “There is an indefinite delay in the Novitas determination and in the meantime Pacific Edge continues to be paid by Medicare for its testing.”

Synlait Milk increased 2.5c or 5.81% to 45.5c after telling the market it has refinanced its banking facilities with a new syndicate including include ANZ, Bank of China, Bank of Communications, China Construction Bank, HSBC, Industrial and Commercial Bank of China, Kiwibank, and Rabobank.

The new funding arrangements total $450m made up of working capital with a peak of $160m, revolving credit of $205m, and a term loan of $75m.

The new banking facilities are in addition to the $130m shareholder loan. The bank refinancing was a condition of a2 Milk, down 23c or 3.73% to $5.93, supporting Synlait’s recapitalisation, which shareholders will vote on this week.

Briscoe Group was up 10c or 2.06% to $4.95; Ventia Services gained 8c to $4.88; and NZ King Salmon Investments increased 1.5c or 6.25% to 25.5c.

Ryman Healthcare, down 1c to $4.69, has appointed former Channel Infrastructure boss Naomi James as the new chief executive, starting on Nov 4. James was previously on the Central Adelaide Health board.

Summerset declined 19c to $11.70; Mainfreight decreased $1.29 or 1.76% to $72.50; Freightways eased 27c or 2.78% to $9.43; Skellerup was down 12c or 2.45% to $4.78; Vista Group fell 22c or 7.36% to $2.77; and Sky TV shed 9c or 3.36% to $2.59.

AFT Pharmaceuticals was down 9c or 2.71% to $3.23; Scales Corp declined 10c or 2.7% to $3.60; ikeGPS fell 5c or 8.06% to 57c; and 2 Cheap Cars decreased 4c or 5.19% to 73c.

Property stocks Argosy shed 4c or 3.45% to $1.12; Precinct was down 2.5c or 1.89% to $1.295; Vital Healthcare Trust eased 4.5c or 2.3% to $1.91; and Kiwi decreased 2.5c or 2.6% to 93.5c.

Solution Dynamics was up 3c or 2.5% to $1.23 after declining Being AI due diligence following its interest in making a partial or full takeover. Solution said the Being proposal was incomplete and highly conditional, and one hurdle was that Solution shareholders would not receive cash for exiting their holdings. Being AI was unchanged at 5.8c.

Tags: Market Close