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South Eastern and Cedenco shares rise

By Nicholas Bryant

Friday 3rd November 2000

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Out-of-the-ordinary investor interest in two listed companies, South Eastern Utilities and Cedenco, over the past week has increased speculation the future of both companies will be announced soon.

Both stocks have been illiquid over the past month with hardly any trades but some possibly astute buying has seen the share prices climb.

In the past week 58,000 Cedenco and 92,000 South Eastern Utilities shares have been snapped up.

The Cedenco stocks were bought for $1.26 to $1.30 a share, pushing the stock's selling price to $1.40.

The South Eastern Utilities shares traded from 90c to 92c.

Its selling price is now 94c, close to its year-high of 97c.

South Eastern Utilities has been sitting idle for the past year but has $70 million in cash - proceeds from selling its Wairarapa Electricity business last year and from bank interest accrued from the cash since the sale.

The company has been actively pursuing a number of "promising" investment opportunities since selling Wairarapa Electricity and is understood to have narrowed its options down to three potential investments.

With borrowings added to its cash, South Eastern Utilities could fund a $120 million purchase.

And if an issue of new shares were added to the equation opportunities would further increase.

South Eastern Utilities chairman Norman Geary has indicated whatever is chosen, the investment "must be able to be doubled in value for the benefit of shareholders."

An acquisition is not the only option though, with the company's chief executive, George Gould, signalling the possibility of returning cash to shareholders if a suitable acquisition cannot be found.

Mr Gould said news on the company's future would be released very soon.

Mr Geary also chairs bulk food manufacturer Cedenco, which is up for sale after Brierley indicated it wanted to sell its 48.5% shareholding.

Brierley had considered the Cedenco business no longer strategic.

To allow other shareholders to participate in the sale process on similar terms as BIL, the board of Cedenco decided to seek offers for 100% of the company from prospective buyers.

With the management team of BIL in New Zealand this week, it seems likely they will be briefed on the Cedenco sale process and potential buyers.

Cedenco is understood to be on target to achieve a profit before tax of $3.1 million for the year to September 30.

That compares with $2.2 million for the 1999 period - a 40% increase.

Offers for Cedenco closed at the end of October.

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