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

Shanghai trip to inspire New Zealand teachers

16 May 2016 News
Asia New Zealand Foundation Shanghai trip to inspire New Zealand teachers A group of teachers hailing from Invercargill to Whangarei... more

Highest ever percentage of women on state sector boards

16 May 2016 News
New Zealand Government Hon Louise Upston Minister for Women 15 May 2016 Highest ever percentage of women on state sector boards New... more

Business

NZ dollar tumbles vs Aussie after RBA minutes

17 May 2016 Business News By Johnathan Underhill
Tuesday 17 May 2016 05:10 PM NZ dollar tumbles vs Aussie after RBA minutes, extends slide on inflation outlook May 17 ... more

Emirates Team New Zealand partners with HP NZ

17 May 2016 Business News
HP New Zealand Media Alert Emirates Team New Zealand partners with HP NZ to drive performance in 35th America’s Cup Auckland, ... more

Living

NZ-themed Salisbury Festival now open

29 May 2016 Arts
The Ageas Salisbury International Arts Festival, recently awarded silver for Best Tourism Event in South West Tourism Awards, is now... more

Exhibition to Showcase Ashburton’s Migrant Community

16 May 2016 Lifestyle
Crossing The Bridge Exhibition to Showcase Ashburton’s Migrant Community 16 May 2016 A photography and film exhibition... more

Property

Record annual profit for Kiwi Property

16 May 2016 Property
By Jonathan Underhill May 16 (BusinessDesk) - Kiwi Property Group, the country's biggest listed property investor by market value,... more

Record annual profit for Kiwi Property

16 May 2016 Property
Portfolio gain, rental income growth delivers record annual profit for Kiwi Property By Jonathan Underhill May 16 (BusinessDesk) -... more

Migration

Kiwis could be affected by tighter UK rules

30 Mar 2016 Migration By Audrey Young
British High Commissioner Jonathan Sinclair is defending changes to skilled migrant rules for Britain but suggests they won't affect... more

Immigrants' attitudes to corruption worries SFO

17 Feb 2016 Migration By Sophie Boot
Feb. 17 (BusinessDesk) - New Zealand's record inbound migration has undermined the country's squeaky-clean reputation because of an... more

Travel

Jucy plans to expand pod-style hotel chain to Australia

16 May 2016 NZ Tourism
Article - BusinessDesk Monday 16 May 2016 12:20 PM Jucy plans to expand pod-style hotel chain to Australia in 2017 By Fiona... more

Budget 2016: Cycle trail funding boosts regions

16 May 2016 NZ Tourism
New Zealand Government Rt Hon John Key Prime MinisterMinister of Tourism 15 May 2016 Media Statement Budget 2016: Cycle trail... more

Sport

New Zealand’s ‘other’ national sport has its time to shine

16 May 2016 Sport
Kids' Lit Quiz New Zealand’s ‘other’ national sport has its time to shine Monday, May 16 2016: There’s no... more

Panthers match huge success for Christchurch

16 May 2016 Rugby League
Chambers PR Penrith Panthers v NZ Warriors May 15, 2016 Panthers match huge success for Christchurch The sold-out Penrith Panthers... more

Columns

Gordon Campbell on NZ’s support for the Kazakh dictatorship

16 May 2016 Column
Column - Gordon Campbell   Gordon Campbell on New Zealand’s support for the Kazakh dictatorship Thanks to Sacha Baron... more

Gordon Campbell on the future of conservatism

12 May 2016 Opinion By Gordon Campbell
    For years, observers have noted the contrast between Prime Minister John Key’s ordinary Kiwi bloke persona, and... more

Kiwi Success

New appointments to Vulnerable Children’s Board

12 May 2016 Appointments
New Zealand Government Hon Anne Tolley Minister for Social Development 12 May 2016 New appointments to Vulnerable Children’s... more

University of Otago appoints next Dean of Pharmacy

28 Apr 2016 Appointments
University of Otago University of Otago appoints next Dean of Pharmacy A leading researcher from Canada has been appointed as the... more

Recruitment

Zero-hour contracts gone, PPL extended

10 Mar 2016 Recruitment
New Zealand Government Hon Michael Woodhouse Minister for Workplace Relations and Safety 10 March 2016 Zero-hour contracts gone, PPL... more

Scheme helping to staff hard to fill positions

28 Feb 2016 Recruitment
New Zealand Government Scheme helping to staff hard to fill positions Health Minister Jonathan Coleman says an incentive scheme... more