MARKET CLOSE: NZ shares fall as market digests 53% of Contact Energy

New Zealand shares fell, with the NZX 50 Index retreating from a record high, as investors sold down their holdings to participate in the bookbuild for the 53.1% of Contact Energy being offloaded by Origin Energy at a discount. Mighty River Power and Spark New Zealand were among those to fall.

The S&P/NZX 50 Index fell 24.09 points, or 0.4%, to 5933.76. Within the index, 33 stocks fell, nine rose and eight were unchanged. Turnover was $155 million.

Contact shares remained suspended, having traded last on Monday at $5.02 and the sale price for the Origin stake set at $4.65 a share.

"Who would have thought in the last five years that Contact Energy would be offloaded by Origin at a price of $4.65?" said Grant Swanepoel, head of research at Craig's Investment Partners. "It's not a desperate price but it's certainly a willing seller."

"I would be surprised if knowledgeable investors were not looking for a piece of this at this price," he said. The retention of Origin secondee Dennis Barnes as chief executive, with Mr Barnes becoming a Contact employee, was a major plus. "That would have been my one concern: if he went with the sale," Mr Swanepoel said.

Prices for the most liquid stocks on the bourse, such as Spark NZ, fell as investors organised to fund purchases of Contact stock, with some 389.3 million shares worth $1.8 billion to be laid off in New Zealand and offshore. Spark dropped 1.7% to $2.945. Contact is planning to restore its ASX listing, abandoned after Origin came on to the register in 2003.

Other energy stocks were also down slightly, losing some of the gains most made the day before the Contact announcement, when the continued operation of the Rio Tinto-controlled aluminium smelter at Tiwai Point was confirmed, removing a major risk for investors. Mighty River Power shed 3.1% to $2.79 and TrustPower fell 1.9% to $7.75.

Meridian Energy fell 1.3% to $2.29 and Genesis Energy dropped 1.1% to $1.75.

Fonterra Shareholders' Fund fell 2.3% to $4.69 ahead of the GlobalDairyTrade auction overnight and Fonterra's board meeting at the end of the week, which is almost certain to include revised guidance for milk payouts and dividends.

Air New Zealand fell 1.5% to $2.65 and Port of Tauranga declined 1% to $17.52. Orion Health Group, the hospital management software company, fell 1.5% to $3.91.

Tourism Holdings, the campervan rental company, rose 1% to $1.95. The company said today it will remain listed and says it has the balance sheet strength to take on debt to fund acquisitions. The announcement comes after the Auckland based company hired First NZ Capital in April to help with a review of its capital structure.

VMob rose 2.9% to 36c. The NZAX listed mobile technology company says it has delayed a planned listing on the ASX because of negotiations and so management can focus on current sales momentum.

Coats Group, the company that grew out of diversified investor Guinness Peat Group, rose 1.6% to 65c. The company turned to a first half loss after a writedown on the sale of its unprofitable EMEA crafts business. The UK based threadmaker reported a loss of $US48.1 million, compared to a profit of $US15 million, a year earlier.

(BusinessDesk)