Investors queue for Eroad’s retail share offer, plus Australia’s budget bets big on things returning to near normal quickly
Eroad capital raising exceeds expectations
Demonstrating investors’ appetite for technology stocks, transport tech services company Eroad has increased acceptances to $11 million in its retail share purchase plan after receiving applications totalling $18.46 million, more than twice the $8 million originally sought.
The retail offering was part of Eroad’s capital raising announced in September that also included a $42 million institutional placement.
The company said applications will be scaled on a proportionate basis in line with the number of shares held by applicants.
Chair Graham Stuart said the $53 million in new funding would be used to accelerate the firm’s growth strategies through product development and sales and marketing.
The new shares will be issued at $3.90, with trading to commence on October 9.
Eroad shares closed down 1.2 percent at $4.14.
STA Travel bank account almost empty at time of collapse
The liquidators of STA Travel may need to seek liquidation funding, given the company’s negligible cash reserves.
Deloitte’s Colin Owens and David Webb said in their first liquidator’s report the company was estimated to have assets of $34,000, with $30,000 in bank funding.
Trade and other receivables were yet to be confirmed, but the estimated shortfall to creditors is likely to be around $11.5 million. Preferential creditors are owed $439,000 and unsecured creditors about $11.1 million.
The liquidators planned to look into the affairs of the company and the circumstances leading to its collapse.
The New Zealand business, which opened in 1984 and was part of the global STA Travel Holding group, previously employed 60 staff and operated at 11 locations.
Air NZ CFO to step down next year
Air New Zealand chief financial officer Jeff McDowall is the latest senior executive to announce he will leave the airline, towards the middle of 2021 after the completion of the company’s planned capital raising.
CEO Greg Foran acknowledged the role McDowall had played since the onset of Covid-19 and in a career spanning two decades with the airline.
The company plans to commence a global search for a successor soon.
McDowall’s resignation follows that of chief commercial and customer officer Cam Wallace who resigned in September.
At last week’s annual meeting, Foran confirmed more than 3,500 Air New Zealand staff had lost their jobs since March.
Kiwibank household spending track
Kiwibank’s latest household spending tracker reveals we’re eating a lot more healthy food with sales of fresh produce up dramatically on a year ago, while at the same time alcohol purchases have also spiked higher.
Spending on DIY and home furnishings, as well as home office renovations have also picked up but on the flip side spending on transport is not back to pre-Covid levels as employers support staff working from home. In this new Covid world, we’re also using cash a lot less frequently than we used to. Cash withdrawals took a step down during the lockdown and haven’t recovered.
Aussie Federal Budget assumes a lot will go right next year
The economic statement delivered by Australian treasurer Josh Frydenberg last night reflects the country’s well-known optimism, assumes a lot of things will go right, including the availability of a vaccine next year, and that further outbreaks in Australia can be locally contained.
While the budget assumes a big economic rebound, Treasury officials imply this should be taken with a grain of salt, warning of “substantial uncertainty around the global and domestic outlook”.
The budget forecasts real GDP to fall by 3.75 percent in the 2020 calendar year but, surprisingly, it suggests real GDP could rebound by as much as 4.25 percent next calendar year, pointing to “further easing of containment measures, improving business and consumer confidence and government support”.
Overall, the budget tips exports to fall by 9 percent in 2020-21 and then grow by 2 percent in 2021-22. Mining exports are expected to grow by 0.5 percent in 2020-21 and 4 percent in 2021-22 because of “robust demand for iron ore from China” despite trade tensions, and a gradual recovery in other key export partners.
Imports are tipped to fall by 9.5 percent in 2020-21, after a drop of 7.1 percent the previous year, largely driven by fewer Australians travelling overseas.
The clean energy revolution clocks up another milestone
The clean energy revolution hit another major milestone recently in the US as solar and wind company NextEra Energy assumed, for a short time, the mantle as America’s most valuable energy company, relegating ExxonMobil to second place.
NextEra Energy, the nation’s largest renewable energy company, last week briefly surpassed Exxon in market capitalisation, making NextEra the most valuable company among all US energy and utility stocks. It’s a significant milestone given that Exxon was the world’s most valuable publicly traded company as recently as 2013. Now Exxon’s market value of $142.2 billion, is only $1 billion more than NextEra.
Although the moment was fleeting, it further reinforces investors’ extreme optimism around clean energy and deep pessimism about the future of fossil fuels.
But the fact NextEra is even close to Exxon in market value is also significant because it generates much less revenue. Exxon raked in US$265 billion in revenue last year, compared with just US$19.2 billion for NextEra.
While Exxon is the world’s most well-known brand within the fossil fuels industry, little-known NextEra has become a proxy for bets on renewable energy. The Florida-based company calls itself the world’s largest utility and the biggest generator of wind and solar energy.
In August, Exxon was kicked out of the Dow Jones Industrial Average, the exclusive 30-stock index it was a member of for 92 years. Exxon has lost more than half of its value this year alone.
