Burger King’s debt-funded private equity owner has put it into receivership and up for sale, but hopes are high workers can keep their jobs. Meanwhile, NZME warns of advertising collapse and Westpac suspends its dividend.

Whopper receivership: The Covid-19 lockdown has claimed its first major business casualty with the owners of Burger King New Zealand placing the business in receivership and putting the business up for sale. Korda Mentha’s Brendon Gibson and Grant Graham have been appointed receivers for Tango Finance, Tango New Zealand and Antares New Zealand Holdings, which are the franchise operators for Burger King in New Zealand.

For sale: The receivers say they want to sell the business and are planning to seek support from the companies’ suppliers and landlords. They said that the businesses’ financiers and master franchisor support this process. Burger King employs more than 1500 workers at its 83 outlets nationwide.

Pay cut: Staff have been told their jobs are safe for now, but they have been required to take a 20 percent pay cut. Antares Restaurant Group, a unit that is not in receivership, received $11.5 million in wage subsidies for just over 1,918 workers. The receivers say approximately $15 million is owed to trade creditors.

Write off: US private equity firm Blackstone paid $107 million for the Burger King operations back in 2011 and had recently sought to sell the business.

Job losses: 120 staff at Two Degrees Mobile are set to lose their jobs as part of a wider cost-cutting drive that will see its 1,200 strong workforce cut by a tenth. The company said it would cut its capital spending, delay non-essential projects, impose a hiring freeze, and renegotiate supplier rates and vendor costs.

Advertising plunge: NZ Herald and NewstalkZB owner NZME said it expected its April advertising revenues to be about 50 percent lower than in 2019. It said it remained impossible to predict with any accuracy the impact of the pandemic on its full year financial performance, but it expected revenues would be significantly down from last year. NZME said it planned to reduce staffing numbers and planned for all staff to take a 15 percent pay cut to offset the fall in revenue.

Will they merge? Plans to revisit the proposed merger between NZME and Stuff may well come back on the table given the financial challenges both companies face. The Commerce Commission blocked the merger in 2016, a decision that was upheld by the Court of Appeal in 2018. But what would happen now if a merger proposal was proposed as a matter of survival?

Some good news: Having last week announced plans to postpone drilling of its final Maui-8 exploration well off the coast of New Plymouth, oil exploration giant OMV reported gas and liquids in the final well of its recent offshore drilling campaign. Full testing of the new find had been interrupted due to the Covid-19 lockdown, but the company said the well, drilled to a depth of more than four kilometres, showed hydrocarbons in several layers of sandstones. It said the discovery had the potential to be the first major energy find in more than a decade.

Markets push higher: The NZX50 started the shortened week positively, closing up almost 2 percent at a one-month high of 10,159. Some of the day’s leading gainers included Air New Zealand, up 15 percent at $1.04, Serko up 14 percent at $2.70, and Vista up 15 percent at $1.16. In Australia, the ASX200 added to last week’s gains, closing up 1.9 percent at 5443.

Taking a hit: Westpac Banking Corporation, the parent company of Westpac NZ, revealed it would take at least a A$1.43 billion hit in the first half due to the cost of the AUSTRAC money-laundering debacle as refunds to customers continued to flow out the door. Recently appointed CEO Peter King said the bank was in a strong financial position after raising A$2.8 billion last year, but admitted it was struggling to accurately forecast what provisions it would need to take from credit losses arising from the Covid-19 crisis.

Dividend suspended: It was likely the bank would be forced to delay the payment of a first-half dividend following orders from the regulator to suspend distributions “until the outlook is clearer.”

More bad news likely: Westpac said it would report on impairments from Covid-19 before its full result on 4 May. It would include a “significant collective provision increase in anticipation of credit losses”. Late last week the bank said it was working with 40,000 business customers wanting help.

Record drop: Total visitor arrivals to New Zealand plunged 11 percent year-on-year in February to 372,700, with visitor arrivals from China down 90 percent. It was the biggest drop in arrival numbers for any February month on record, according to Stats NZ. Normally peak season for the tourism industry, and coinciding with Chinese New Year, visitor arrivals from China plummeted by 45,900 (90 percent) in February, before the full travel restrictions were imposed.

March will be worse: The Government restricted entry into New Zealand by foreign nationals arriving from or transiting through mainland China on 2 February. The figures for the month of March will be even more dramatic following the closure of the border to all overseas visitors on 19 March

Not happy: On the day students across the country return to school for the start of term two online, MBA students at some of the world’s leading business schools are demanding a refund on their tuition fees as compensation for campus closures and the switch to what they view as “inferior online learning.”

Big bucks: A petition circulating among students at The Wharton School, where fees alone for a two-year MBA degree can exceed US$160,000, has received close to 900 signatures, equivalent to a single year’s intake. At Stanford’s Graduate School of Business, where the two-year MBA programme costs US$150,000 in fees, an online petition has been signed by almost 80 per cent of the class.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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