NZ Refining to review New Zealand's 'laziest balance sheet'   27 Apr 2012

Pattrick Smellie

New Zealand Refining’s board has promised to review its dividend policy, heading off a charge that investors bear the brunt of volatile earnings through gyrating payments and what one shareholder called “the laziest corporate balance sheet in New Zealand.”

The company that runs the nation’s only oil refinery needed small shareholder support in today’s crunch vote in Whangarei on a $365 million Continuous Catalyst Regeneration Platformer Project (CCR). The project required shareholder approval because of its size relative to NZ Refining’s market capitalisation of around $785 million.

Shareholders BP and Mobil, who hold 43 percent of the refinery’s shares, are understood to have opposed the CCR proposal, and the company mounted an unprecedented round of shareholder briefings to try to shore up a majority for the CCR.

If rejected, the refinery will still spend $105 million on a must-do upgrade to keep the refinery running past 2015.

The board’s most trenchant critic was former Contact Energy and Shell NZ director John Milne, who said it was “astonishing” that the company was in its 50th year of operation and “still has no dividend policy.” He criticised its policy of carrying almost no debt on its balance sheet.

Reduced dividends were identified as a major concern by other small shareholders, who depended on share income to meet living expenses.

However, chairman David Jackson appeared to expect the attack, announcing in his general remarks the board would later this year review the optimal gearing for the company, whose policy has been to completely repay debt raised for major projects at the expense of dividends.

While deleveraging had been prudent during the global financial crisis, the board and management would consider “whether this is appropriate for the long-term structure of the company.”

The review would be undertaken this year.

The touch and go vote occurred at 2pm, with a result to be announced to the NZX this afternoon. NZ Refining shares remain in trading halt in the meantime, having last traded at $2.75.

Craigs Investment Partners said in analysis this week the CCR option was the better of the two options, although it would prefer there was an option for delay, and warned there was no guarantee dividends would return to normal levels before 2020.

Milne said even though the company had substantial retained earnings, the board treated the payment of dividends as “purely discretionary.” Jackson, in turn, described NZ Refining as “highly cash-generative” despite the volatile impact of swings in global refining margins and the exchange rate on its profitability.

Milne also accused the board of failing to act transparently by refusing to reveal how many of the directors representing oil companies had opposed the CCR project, and to allow one of as many as four directors to explain to shareholders why they had objected.

Jackson would not allow such disclosures, saying communication should be directed through the chair and chief executive.

(BusinessDesk)

Add a comment

Bookmark and Share

News

ANZAC 2015 in pictures

25 Apr 2015 News
NZ News UK attended several ANZAC ceremonies in Auckland today. These photos were taken at the Northcote Community where the... more

ANZAC 2015: Anzac Messages, NZ Prime Minster and Governor-General

24 Apr 2015 News
Anzac Day 'We will remember them'   Anzac Day 2015 – Message from the Governor-General of New Zealand On 25 April every... more

Business

Mercer's CEO Shepherd, CFO Blathwayt quit the manufacturer

24 Apr 2015 Business News
Article - BusinessDesk   Mercer's CEO Shepherd, CFO Blathwayt quit the manufacturer By Suze Metherell April 24 (BusinessDesk) -... more

Oracle-owned boatbuilder has had two government grants

23 Apr 2015 Business News By Fiona Rotherham
  Oracle-owned boatbuilder has had two government grants in three years April 23 (BusinessDesk) - Core Builders Composites,... more

Living

Britain remembers the ANZACs - 100 years on

25 Apr 2015 ANZAC By Charlotte Everett
100 years after allied forces landed in Gallipoli, 25 April – ANZAC Day – has been commemorated in the UK officially for... more

A Kiwi's guide to ANZAC in Europe - our list of events across the UK, Ireland and beyond

24 Apr 2015 ANZAC By Charlotte Everett
Tomorrow marks the 100th ANZAC Day, and if you are a Kiwi or Aussie far from home there are plenty of events on to enable you both to... more

Property

New process for red zone Crown offers

21 Apr 2015 Property
Canterbury Earthquake Recovery Minister Gerry Brownlee has announced a process to give everyone a say on the Crown offers to... more

NZ house prices rise 8% in March, led by 13% Auckland jump

14 Apr 2015 Property By Tina Morrison
April 14 (BusinessDesk) - New Zealand residential property prices rose in March, led by Auckland where housing supply isn't meeting... more

Migration

NZ migration hits new annual record in March

23 Apr 2015 Migration By Tina Morrison
April 23 (BusinessDesk) - New Zealand migration hit a new annual record in March, as more students arrived from India and China and... more

PM plays down claim war criminals are living in NZ

2 Mar 2015 Migration
Prime Minister John Key says he is not aware of any suspected war criminals from the former Yugoslavia in New Zealand. The claim that... more

Travel

Air NZ's Houston link paves way for United Airlines tie-up

17 Apr 2015 Travel & Tourism By Fiona Rotherham
  Air NZ's Houston service paves the way for partnership with United Airlines, analysts say April 17 (BusinessDesk) - Air New... more

Wellington Airport revised fees 'just within' OK range

17 Apr 2015 Travel & Tourism By Tina Morrison
  Wellington Airport's revised fees are 'just within' acceptable range of returns, regulator says April 17 (BusinessDesk) -... more

Sport

Price and Wesko Nail the Dressage at Kentucky

25 Apr 2015 Equestrian
Kiwi eventer Tim Price and Wesko have delivered their best-ever dressage score to sit at the front of the field this morning at the... more

ISAF Sailing World Cup Hyeres

25 Apr 2015 Sailing
ISAF Sailing World Cup Hyeres: Burling and Tuke still lead, one more day of fleet racing At the end of day three at ISAF Sailing ... more

Columns

Gordon Campbell on the hair-pulling finale and Gallipoli

24 Apr 2015 Column
  Gordon Campbell on the hair-pulling finale, and the real hero of Gallipoli Don’t know about you, but when hi-jinks and... more

Gordon Campbell on UE pass rates & university dropout rates

14 Apr 2015 Opinion
Houston, there is clearly a problem with (a) the plunge in pass rates for University Entrance qualifications, which has been ... more

Kiwi Success

Fonterra reshuffles management team

24 Apr 2015 Appointments By Fiona Rotherham
  Fonterra reshuffles management team to speed up value-add strategy April 24 (BusinessDesk) - Fonterra Cooperative Group, the... more

TVNZ and RNZ appointments announced

23 Apr 2015 Appointments
New Zealand Government TVNZ and RNZ appointments announced Broadcasting Minister Amy Adams today announced the appointment of Sussan... more

Recruitment

Apprenticeship scheme launched

18 Apr 2015 Recruitment
The He Toki ki te Mahi Apprenticeship Training Trust was launched by Prime Minister, the Rt Hon John Key at Rehua Marae in ... more

Chinese rail workers must be paid minimum wage

17 Apr 2015 Recruitment
KiwiRail must immediately stop further Chinese engineers from working here until they can guarantee they are being paid the New... more