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

Museum of Waitangi set to become a national and visitor Icon

5 Feb 2016 News
05 February 2016 Museum of Waitangi set to become a national and visitor Icon The new Museum of Waitangi, opened today by the... more

ETS Review modelling documents released

5 Feb 2016 Environment
5 February 2016 ETS Review modelling documents released Three technical documents are being released to help New Zealanders engage... more

Business

NZ wool prices slip on higher kiwi, reduced China demand

5 Feb 2016 Business News By Tina Morrison
Article - BusinessDesk   NZ wool prices slip on higher kiwi dollar, reduced demand from China By Tina Morrison Feb. 5 ... more

NZ directors more aware of risk, focus on cyber security

5 Feb 2016 Business News By Sophie Boot
Article - BusinessDesk   NZ directors more aware of risk, focus on cyber security   Feb. 5 (BusinessDesk) - Directors of... more

Living

Does what it means to be a Kiwi depend on where you live?

5 Feb 2016 Lifestyle
  4 February 2016What it is to be a Kiwi may depend of where you live – Auckland or elsewhere in New Zealand – with... more

2015: The Year of the Blockbuster

21 Jan 2016 Entertainment
Motion Pictures Distributors' Association   January 21, 2016 2015: The Year of the Blockbuster For the second year in a row the ... more

Property

Auckland house sales volumes jump to 8-year high in January

4 Feb 2016 Property By Tina Morrison
  Auckland's house sales volumes jump to 8-year high in January, Barfoot says Feb. 4 (BusinessDesk) - Auckland residential... more

Auckland house prices little changed in December

6 Jan 2016 Property By Sophie Boot
Article - BusinessDesk   Auckland house prices little changed in December as sales volumes, listings drop Jan. 6 (BusinessDesk)... more

Migration

More than 27,000 new Kiwis in 2015

5 Feb 2016 Migration
  This Waitangi Day, New Zealand will roll out the welcome mat to 24 new citizens at Government House, and acknowledge over... more

NZ net migrants reach all-time high 63,700 in boom November

21 Dec 2015 Migration
Article - Businesswire   NZ net migrants reach all-time high 63,700 in boom November year for travel By Jonathan Underhill Dec. ... more

Travel

More than 100,000 SmartGate users in one week

22 Jan 2016 Travel & Tourism
New Zealand Government Hon Nicky WagnerMinister of Customs 22 January 2016 More than 100,000 SmartGate users in one week Customs ... more

Wellington ratepayers to pay $8mln for Canberra flights

21 Jan 2016 Travel & Tourism By Pattrick Smellie
Wellington ratepayers to pay $8mln over 10 years for Canberra flights Jan. 21 (BusinessDesk) - Wellington City Council is... more

Sport

Global Racing Teams Attracted to Godzone’s Fifth Chapter

5 Feb 2016 Multisport
70 teams from 11 nations will come together in Kaiteriteri, Tasman this April for the fifth chapter of New Zealand’s premier ... more

Rob Nicol joins Mondiale Aces squad

22 Jan 2016 Cricket
Auckland Cricket Friday, 22 January 2016 Rob Nicol joins Mondiale Aces squad for Ford Trophy Qualifying Final The Mondiale Auckland... more

Columns

Gordon Campbell on Paula Bennett’s fantasy politics and Iran's election

22 Jan 2016 Opinion By Gordon Campbell
We seem to be living in an era of virtual government, where governments promote only an illusion of policy kapow! rather than the... more

Gordon Campbell on the Dotcom extradition decision

24 Dec 2015 Opinion
Column - Gordon Campbell   Gordon Campbell on the Dotcom extradition decision Inevitably – and with justification –... more

Kiwi Success

Appointment of GCSB Acting Director

5 Feb 2016 Appointments
New Zealand Government Hon Christopher Finlayson5 February 2016 GCSB Chief Legal Advisor Lisa Fong will become the Acting Director... more

Heading to Europe And the Olympics of Architecture

22 Jan 2016 Flying Kiwi*
Warren and Mahoney Heading to Europe And the Olympics of Architecture Architectural graduate Antonia Lapwood has been awarded the... more

Recruitment

Addressing skills shortages in dairy farming

11 Dec 2015 Recruitment
    11 December 2015 Minister for Tertiary Education, Skills and Employment Steven Joyce and Minister for Social... more

Alignment of NZ and Australian qualifications frameworks

4 Dec 2015 Recruitment
New Zealand Government Hon Steven Joyce Minister for Tertiary Education, Skills and Employment 4 December 2015 Tertiary Education,... more