By Paul McBeth
Thursday 2nd October 2008
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US based hedge-fund Elliott International, which owns 3% of the company, nominated Mark Tume and Mark Cross as part of a bid to overhaul the company’s strategy and push for structural rather than operational separation. Telecom’s stock rose 3.2% to NZ$2.91 and has declined 35% this year.
“While we recognise the significant time and effort that Elliott has gone to in evaluating the potential benefits of structural separation” it isn’t the right time to revisit that option, Boyd said.
Since increased regulation in the sector forced Telecom to separate its retail and wholesale business, the company’s profits have fallen as it lost market share, driving down its share price.
Elliott International said Telecom has been underperforming and is dissatisfied with the company’s performance. Boyd said he is confident the strategy will see a return in shareholder value, as the company “remains well financed and in a strong position.”
“We reiterate that, subject to any material change in circumstances, we intend to pay shareholders quarterly dividends of 6.0 cents per share for the next two years,” said Boyd.
The bid to elect Tume and Cross may fail without the existing board’s support. Existing directors Rod McGeoch and Kevin Roberts are up for re-election.
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