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Stocks to watch: Air NZ, APN, Delegat's

Tuesday 19th October 2010

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Air NZ and Virgin Blue are offering to increase seat capacity by 10% on six trans-Tasman routes, APN is mulling over a bond offer to raise up to $200 million, while Delegat's has launched a takeover bid for the 45% of Oyster Bay Marlborough Vineyards it doesn't already own.

Air New Zealand (AIR): The national carrier and Virgin Blue have offered to increase seat capacity on six trans-Tasman routes, including three from Wellington, by 10% within three years, and 15% by the fifth year, in a bid to gain approval for their alliance from Australian anti-trust authorities. The deal was previously blocked because of concerns that it would reduce competition and increase prices. Shares were unchanged yesterday at $1.33. 

APN Media (NZ) (APN): The media company which publishes the New Zealand Herald and owns The Radio Network is mulling a bond offer to raise as much as $200 million. APN is testing investor interest in a proposed five-year bond offer of $150 million, with the option to accept oversubscriptions of up to $50 million. The company will use the funds for general financing purposes, and to diversify its debt profile. Shares fell 2.3% yesterday to $2.56. 

Delegat's Group (DGL): The winemaker has launched a takeover bid for the 45% of Oyster Bay Marlborough Vineyards it doesn't already own. The Oyster Bay brand is Delegat's flagship export brand. Delegat's is offering either $1.80 per Oyster Bay share or one Delegat's share for every Oyster Bay share to shareholders residing in either New Zealand or Australia, an offer which values all of Oyster Bay at $16.2 million. Delegat's shares rose 6.7% yesterday to $1.75, while Oyster Bay was unchanged at $1.60. 

Kathmandu Holdings (KMD): The Reserve Bank of Australia is likely to raise interest rates in November,  creating further headwinds for retailers such as Kathmandu ahead of Christmas trading, according to Aegis Equities Research analyst James Levien, quoted on the ShareChat website. He noted that the outdoor retailer is heavily reliant on favourable market conditions during its three promotional periods during the year, Christmas, Easter and winter. Shares rose 1.6% to $1.95. 

New Zealand Oil & Gas (NZO): Oil rose sharply overnight, pushing above US$82 a barrel as strikes affecting French shipping and refineries lifted refined product futures. France has began to use emergency reserves as the strike by refinery and port workers continued and petrol pumps began running dry. Shares in NZ Oil & Gas, the energy exploration and production company, fell 1.5% yesterday to $1.33. 

Tourism Holdings (THL): The campervan rental company expects to post a first-half loss of up to $1 million as the strong kiwi dollar saps demand from British tourists. The company said New Zealand's currency helped depress the number of UK visitors, which are down by about 5% from a year ago, and cut the hire period by some 10% as tourists reduced the length of their visit. The shares fell 3.3% yesterday to 88 cents. 

Telecom (TEL): The chief executive of the Telecommunications Industry Group Rob Spray has resigned and his position will not be replaced in the near future. The industry lobby group, of which Telecom is a member, said it won't appoint a new CEO until the government releases its plan on Ultra Fast Broadband. Shares were unchanged at $2.07. 

Themes of the day: Shares on Wall Street advanced overnight, helped by better-than-expected third quarter results from Citigroup Inc. and expectations the Federal Reserve would further ease monetary policy.

The Standard & Poor's 500 Index rose 0.7% to 1184.7 in late trading, and in Europe the Stoxx 600 gained 0.3% to 266.64, the highest level in almost six months.  

Oil rose as France began to tap emergency fuel reserves in the wake of extended strikes by refinery and port workers. The New Zealand dollar gained against the greenback overnight, and was last trading at 75.93 US cents.

The Reserve Bank of Australia is set to release the minutes of its October 5 board meeting, which it's hoped will shed light on why the bank left the cash rate unchanged at 4.5% for a fifth straight month.

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