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Stocks to watch: Allied Farmers, Oyster Bay, NZX

Monday 15th November 2010

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Allied Farmers faces a $7 million loss after HSBC pulls the plug on one of its subsidiaries, Oyster Bay supports Delegat's increased takeover offer and reports claim NZX has called for the Financial Markets Bill to be sent back to the drawing board.

Allied Farmers(ALF): The manager of distressed assets faces losing another $7 million after HSBC pulled the credit line on one of the firm's subsidiaries. The Hong Kong-based lender called its $19 million loan facility to Matarangi Beach Estates after Allied refused to put up the same guarantee as the previous owners, Eric Watson and Mark Hotchin. The shares fell 4.4% to 2.2 cents on Friday. 

Kiwi Income Property Trust (KIP): The property investor reported on Friday that first-half distributable profit rose 10% to $33 million. The net loss was $118.5 million, reflecting $143.9 million to account for changes to tax rules on depreciation. The shares were unchanged on Friday at $1.04.  

Oyster Bay Marlborough Vineyards (OBV): The grape grower on Friday said it would support Delegat's Group's takeover offer after it raised the price by 23 cents to $2.08 in cash, or one Delegat's (DGL) share for each share of Oyster Bay, valuing the target company at $18.7 million. Oyster Bay was unchanged at $1.85 on Friday. Delegat's last traded at $1.80. 

NZX (NZX): The securities market operator is calling for the Financial Markets Bill to be sent back to the drawing board, according to press reports. NZX specifically objected to the proposed powers of the new financial markets regulator, which it claims would hinder its ability to compete with offshore exchanges. Shares fell 1.2% on Friday to $1.54. 

Pumpkin Patch (PPL): Greg Muir, the chairman of the children's clothing chain who is seeking re-election at the annual meeting on November 23, faces opposition from shareholders including Paul Glass of Devon Asset Management, the NZ Herald reported. Some fund managers opposed his re-appointment because of his role as chairman of failed finance company Hanover Finance. The shares fell 2 cents to $1.89 on Friday. 

Sanford Ltd. (SAN): The fisheries company said it has entered into a conditional agreement with Pacifica Seafoods to acquire its Greenshell mussel and Pacific Oyster businesses for $85 million. Sanford will fund the acquisition using a new three-year debt facility provided by its existing banks. The acquisition is expected to be earnings accretive for Sanford in the current financial year. Shares rose 1.5% on Friday to $4.70.

Telecom (TEL): The phone company announced on Friday that it had partnered with Vodafone New Zealand to bid for a share of the government's Rural Broadband Initiative. According to press reports the bid, which consists of a combination of fibre, copper and wireless technologies, is one of five submitted. The shares rose 0.9% to $2.18 on Friday. 

Themes of the day: Retail sales for the third quarter are due for release today as store owners anticipate the final three months of the year, their peak trading period. Credit and debit card transactions at core retailers were unchanged last month. US stocks fell on Friday, sending the Standard & Poor’s 500 Index down 1.2%, after Cisco Systems’ forecast missed estimates and has concern swirled about Europe’s sovereign debt crisis. The New Zealand dollar fell against most major currencies as global investors shunned risk on European sovereign debt concerns and the prospect of further policy tightening in China. The kiwi dollar was last trading at 77.24 US cents from 77.56 cents on Friday in New York.

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