UPDATE:F&P Appliances Says New Zealand PM's Comments 'Very Helpful'
17 Février 2009 - 9:27AM
Dow Jones News
Fisher & Paykel Appliances Ltd. (FPA.NZ) said Tuesday
comments by New Zealand Prime Minister John Key that the government
was prepared to step in to assist the company if needed were "very
helpful."
Fisher & Paykel Appliances Chief Executive John Bongard told
Radio New Zealand that Key telephoned him Monday to say the
government didn't want the iconic New Zealand whiteware company to
"fall into the wrong hands."
Key made the call after Fisher & Paykel Appliances' shares
plunged 35% on a profit warning and news it was reviewing
capital-raising options, including issuing equity to a cornerstone
investor.
Earlier this year, Key raised the prospect of large-scale
corporate bailouts but didn't specify which companies would be
eligible. At the time he said that Treasury was "scoping" different
companies.
On Tuesday, the New Zealand Herald quoted Key as saying the
government didn't want to become a primary banker, but it wasn't
ruling out the option of helping Fisher & Paykel
Appliances.
"Governments around the world have taken that course and we
reserve the right to do so," Key said.
His comments gave the beleaguered stock a boost early Tuesday.
The stock jumped 13.9% to NZ$0.74 at 2150 GMT.
"I would hope that investors would see more value in the
business than they currently do and I would hope for an improvement
in the share price today," said Bongard.
Macquarie Equities broker Brad Gordon said the survival of
Fisher & Paykel Appliances was no longer in question after
Key's comments, and the stock would likely rally.
He said he expected government aid would be a last resort and it
would only intervene for well managed companies.
"I think Fisher & Paykel Appliances does fit into that
category. Fundamentally, they haven't done anything wrong," he
said.
Bongard didn't provide any detail on what form government help
could take although analysts said it could be as a banker of last
resort, or might take an equity stake or could ease foreign
ownership regulations.
"From our perspective and from our board's perspective we would
certainly much rather remain independent and a strong New
Zealand-based company and the I think the prime minister was saying
the same thing," he said.
Bongard said he doesn't believe government handouts are the
right thing to do in normal times "but in times like this...I think
strong, decisive unusual action is what's going to get us
through."
Gordon said it might be problematic for the company to remain in
New Zealand hands given its debt had blown out by over NZ$120
million due to the fall of the New Zealand dollar and its market
capitalization had fallen to under NZ$190 million.
Because of its strong intellectual property, Gordon expects a
major competitor such as U.S. Whirlpool Corp (WHR), with which
F&P has strong ties, to be interested in a stake.
"Those guys will want to protect themselves, so one of those, in
my opinion, will step up."
But if such a company buys more than 20%, under New Zealand's
Takeover Code, it must launch a full takeover, which may throw into
doubt continued local ownership.
On Monday, F&P said it expects normalized group net profit
to be NZ$25 million to NZ$30 million in the current fiscal year
ending March 31, against NZ$65.5 million a year earlier.
Accompanying the profit warning was a surprise announcement it
is reviewing its capital structure and examining alternative
sources of capital. Details were sketchy.
Bongard reiterated Tuesday that Fisher & Paykel Appliances'
problems are short term and directly linked to the global credit
crunch.
-By Rebecca Howard, Dow Jones Newswires; 64-4-471-5990;
rebecca.howard@dowjones.com
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