Air NZ dips into the Government loan bailout, while signalling a capital raise next year – plus Hallenstein Glasson pays shareholders a dividend after claiming the pubic wage subsidy
Air New Zealand signals capital raising next year
Air New Zealand has indicated it will need to raise additional capital before June next year while also confirming it has begun drawing down on its $900 million loan facility provided by the Government earlier in the year.
The airline said the Crown facility was always intended to be an interim backstop giving it sufficient liquidity to reposition post Covid-19 ahead of implementing a longer-term capital plan.
However, the government loan doesn’t come cheap with an effective interest rate of between 7 percent and 8 percent.
The company said it continues to evaluate a range of scenarios on how the pandemic may develop and what the various outcomes would mean for its future operating capacity.
“Assuming there are no further material adverse developments, the company is expecting to complete the strategic capital structure review by early 2021 and be in a position to proceed with a capital raising to be completed before June 2021” it said in a statement.
The airline will hold its AGM online tomorrow.
Air New Zealand shares closed on Friday unchanged at $1.31.
Gentrack outlook underwhelms investors
Utilities and airports software company Gentrack, which is set to report its full year result on November 26, expects pre-tax, interest and depreciation earnings will beat the top end of analysts’ forecasts of about $11 million for the current financial year. However, the company is more circumspect about its outlook for next year.
It said second second-half profitability had been achieved through cost reductions, including cutting staff costs in February and March as well as other Covid-19 related cost savings.
Its business plan will be reviewed with incoming chief executive Gary Miles who will start in the role later this week. While Gentrack did not provide specific guidance for FY21, it said it expects next year’s ebitda run rate will be “well below” the current second-half rate, and annual ebidta may be close to breaking even.
The news disappointed investors with Gentrack shares falling 7.3 percent on Friday to close at $1.40. To date, the shares are down 82 percent since September last year.
Medicinal cannabis listing set to be first and possibly only IPO this year
Pharmaceutical grade cannabis company Rua Bioscience has confirmed its impending listing on the NZX will take place on October 22. Chair Trevor Burt says the company will seek to raise $20 million in what will be the first, and quite possibly the only, initial public offering of the year.
The Ruatoria, East Coat, based company, which was an early recipient of a commercial medicinal production licence, will sell up to 40 million shares at 50 cents a share, representing 28.6 percent of the company.
Its research and development costs are listed at $1.3 million, with other operating expenses at $3 million. The company’s main assets include a controlled cultivation facility in Ruatoria and an extraction and manufacturing facility in Gisborne, into which it has invested about $6 million.
The company’s first “material sales” will be through wholesale exports of pharmaceutical grade dried cannabis flower into the German market via Rua’s agreement with Nimbus Health, a licensed European importer and distributor focused on medicinal cannabis products.
Chief executive Rob Mitchell said its export-led strategy is aimed at achieving sustainable revenue as quickly as possible.
“Germany is the largest single market for high grade medicinal cannabis in the world and Rua anticipates its first exports to occur by the end of 2021,” Mitchell said.
Hallenstein announces dividend despite receiving $5.1 million in wage subsidies
Clothing retailer Hallenstein Glasson is set to pay full-year dividends totalling 39 cents per share, including a final dividend of 24c, despite claiming $5.1 million in government wage subsidies.
Reporting a $27.7 million profit for the year ended August, a decrease of 4.2 percent, it said its online sales had grown 46.8 percent on the previous financial year.
Glassons’ sales in New Zealand for the year were $102.6 million, an increase of 1.9 percent on the prior year. In Australia the womenswear business increased 8 percent to $96.6 million.
The company claimed $2.6 million in wage subsidies for 451 Glassons staff and $2.4 million for 415 Hallensteins staff in New Zealand, in addition to JobKeeper subsidies in Australia.
Fellow retailer Briscoe Group has been criticised for its decision to pay a dividend after claiming millions in taxpayer-funded wage subsidy and reporting a profit.
To date more than $440 million in wage subsidy payments paid out by the Government have been returned, including amounts paid to several prominent law firms.
Finance Minister Grant Robertson admitted on Thursday that with the benefit of hindsight the criteria could have been tighter to prevent listed companies claiming subsidies and then paying dividends.
Hallenstein shares closed on Friday at $5.55 after surging 22 percent on news of the dividend payment.
Commodity markets and NZ dollar sold off
Sharemarkets globally took a one-two punch last week, though a late rebound meant some of the early damage was minimised. The NZX50 finished up 1.4 percent and will start the week at 11,797 after strong rebounds by market leaders F&P Healthcare and A2 Milk, who both stand to benefit from a weaker kiwi dollar. In Australia, the ASX200 also gained for the week closing up 1.8 percent to finish at 5964.
US markets initially fell sharply at the start of the week, with the S&P500 at one stage threatening to fall below 3200 but a late rally on Friday saw it finish at 3298, down 0.6 percent for the week. Commodity markets were also weaker with gold the biggest loser falling 4.7 percent for the week to close at US$1859/oz, a two-month low, while Brent crude fell 2.85 percent for the week to close at US$41.92 a barrel.
The NZ dollar had its biggest weekly fall since May ending the week at 65.46 US cents after falling more than 2c or 3.2 percent.
Harley-Davidson to close operations in India
The world’s most well-known motorcycle brand, Harley-Davidson, is calling time on its business in India after a decade-long attempt to break into the world’s biggest motorcycle market.
The company plans to close its Bawal factory in northern India and “significantly reduce” the size of its sales office in Gurgaon, near Delhi.
India is the world’s biggest market for motorcycles and scooters, with more than 17 million sold last year, according to the Society of Indian Automobile Manufacturers. Two-wheelers are by far the most popular means of transport in a country well known for its congestion, which had also, until recently, been one of the fastest growing markets for cars.
Zero emission flights a step closer
In an aviation first, a hydrogen fuel-cell plane capable of carrying passengers completed its maiden flight last week, in another step forward for low and zero-emission flights in the future.
ZeroAvia’s six-seater Piper M-class aircraft — which had been retrofitted with a device that combines hydrogen and oxygen to produce electricity — undertook a taxi, take-off, full pattern circuit and landing on Thursday.
ZeroAvia has said the trip, described as a “hydrogen fuel-cell powered flight of a commercial-grade aircraft,” was a “world first.” Other examples of hydrogen-fuel cell planes that can host passengers do exist, however.
In 2016, the HY4 aircraft, which is able to carry four people, undertook its first official journey when it flew from Stuttgart Airport in Germany. The HY4 was developed by researchers at the German Aerospace Centre alongside “industry and research partners.”