Political Animal backing Russel Norman in Mt Albert Bye--Election

In the battle for Helen Clark's old seat Mt Albert there are many possible candidates lining up to keep that seat warm.

Melissa Leigh from the National Party is the clear front runner in this previous Labour only held electorate and is likely to win the seat.

Labour is still undecided on their candidate, like they are with their tax policy and just about every policy they have a view on.

It is uncertain what every other political party is doing for this seat when the bye-election is due in June of this year.

All except the Green Party.

They are putting up Russel Norman, the current "co-leader" of the Green Party.

A man of obvious credentials and also possessing a wardrobe stocked with thick woolly jumpers.

Politcal Animal backs Mr Norman in his quest for the Mt Albert seat and urges as many Mt Albert folk to vote for him as can be relied upon to do so in that area.

We always back the underdog here at Political Animal and clearly Mr Norman fits that bill.

Get out and vote on election day, the environment will be the winner on the day.

Related Amazon Reading

Progressivism and the World of Reform: New Zealand and the Origins of the American Welfare State by Peter J. Coleman  Buy new: $29.95 / Used from: $24.79 Usually ships in 2 to 3 weeks

c Political Animal 2009

Sky City CEO doubles down

The rationale for Sky City Entertainment [SKC.NZ] loading up the balance sheet with extra shares and as a consequence around NZ$230 million of cash isn't completely clear to me over the last few days since SKC were put on a trading halt on Tuesday 21.

My confusion is compounded by the fact that the $230 million raised appeared to be for two different reasons, for purchase opportunities and "strengthening the balance sheet" in uncertain times but if a purchase is made how does that strengthen the balance sheet? especially if it involves drawing down on the half a billion in unused credit facilities that Sky City currently has.

I am going try to unwind my confusion and explain my point of view on this subject in the following column.

This from a story in Stuff.co.nz might give you an indication on where I might be heading:

But despite its $916 million of debt, SkyCity plans to put the money it raises in a bank deposit account, at least for now.

Chief executive Nigel Morrison said that was because SkyCity "owes no bankers anything."

Just one question though, if you have access to cash in the bank and a rather large debt hanging around your neck don't you pay some of it down?

Well, Nige did say when posted to his position as CEO last year that one of his main tasks would be to be prudent with shareholder funds:

"Our shareholders have made it clear to us that they want us to focus on maximising the performance of the assets we operate. This is what we will be doing. as we have said previously, we expect to achieve this within an 18-month time frame. We will retain tight control over capital and not expend capital unless we are very confident of healthy returns for shareholders".

The emphasis on unnecessary capital spending in addition to paying down debt has been made several times since then and one could be forgiven for thinking that this task was going to be paramount to everything else until performance at the company was "maximised".

That certainly of direction needed to be achieved as the company has floundered directionless over the last 5 years under the previous CEO Evan Davies.

Now of course Morrison does have to be fleet footed and have the ability to change tack as economic circumstances change but the clear direction that he outlined last year has forked out into another, possibly expensive direction:

"For anybody to suggest that the money it just going to sit on deposit in a bank account earning 3 per cent for three years, that's ludicrous," he said. "It's a position of strength. We're not beholden to any financier or any bank." Morrison said it also gave the company funding for acquisitions should opportunities arise. Full Story

Now I am not about to suggest that Morrison is going to plunder more shareholder money on overpriced assets as Evan Davies did, as his reputation for being a canny operator who rejuvenates casinos is well known but I get a little edgy when he is asking shareholders to put their hands in their pockets to buy more casino assets, even if they are as he said, now going for knocked down prices.

It is the move away from the previous stated 18 month aim of being financially prudent and rejigging the business that has me worried and to then focus on other plans that involve large capital expenditures would be a more realistic goal, especially as those casino assets he may now be talking about could be alot cheaper in 6 months time.

It seems to me that he may already have a target casino in mind.

Time to cross your fingers if you are a shareholder. I am.

Sky City @ Share Investor

Sky City Entertainment 2009 Interim Profit Review
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit

Discuss this topic @ Shareinvestor.net.nz

Related Links

Sky City Financial Data

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

Related Amazon Reading



Double or Nothing: How Two Friends Risked It All to Buy One of Las Vegas' Legendary Casinos by Tom Breitling
Buy new: $17.72 / Used from: $1.40
Usually ships in 24 hours

c Share Investor 2009

The kindest tax cut of all : Te Tare no tak'e

Good news for Kiwis today and another sign of a massive change in direction for the National Government when compared to the losers of the last 9 years.

Up to 250 jobs at the Inland Revenue department will go. A very small cut by any means because the department employs more than 5000 but nevertheless a good start to the year.

What this means in real terms is that Kiwis, especially businesses, will be able to operate their lives with less interference from these sorts of people.

That clearly means more time spent on actual work rather than IRD paperwork and as a consequence of that more productivity, something New Zealand desperately needs.

This cut is a reflection of this Government's emphasis on spending less taxpayer money and extracting less of that tax from their pockets in the first place.

It is only a good thing and any criticism is mainly from those that want to see higher taxes, more state involvement and constant interference in our lives.

My only criticism is that the cut was about 1000 too low.

Related Amazon Reading

The World's Best Tax Havens: How to Cut Your Taxes to Zero and Safeguard Your Financial Freedom by Lee Hadnum
Buy new: $42.25 / Used from: $55.25
Usually ships in 24 hours

c Political Animal 2009

More Moola Please!

Back on the agenda for this week is the capital raising that is sweeping NZX listed companies.

Apart from the fact that they have been carried out without the permission of shareholders and the NZX has granted them waivers to allow management to do so, there seems to be a pattern forming.

The latest capital raising to be announced was Sky City Entertainment [SKC.NZ] who came out today with an underwritten offering of 71 million shares to institutions and a further NZ$50 million or around 20 million shares in an offer to smaller shareholders like me.

The company really doesn't need the extra funding because its current debt servicing doesn't have to be re-negotiated for a number of years.

This is much like the deal offered from Fletcher Building [FBU.NZ] and Freightways Ltd [FRE.NZ] for extra capital over the last couple of weeks.

Just doing very rough figures in my head the dilutionary effect for shareholders for these 3 companies is around 15%.

What that means to me is the followng to avoid dilution of my shareholdings:

1. Fletcher Building - additional 150 shares

2. Freightways Ltd - additional 1230 shares

3. Sky City Entertainment - additional 5250 shares

What I have decided to do is the following:

1. Fletcher Building - additional 500 shares @ 5.35 per share approx

2. Freightways Ltd - additional 1800 shares @ 2.44 per share approx

3. Sky City Entertainment - maximum of 6000 shares @ 2.52 per share approx


An additional $NZ 22,000 approx that I must find. Not a problem for me and I don't have a big issue with stumping up the cash because as part owner of these businesses sometimes you extract money from them and sometimes you have to put it back in.

As I mentioned above what I do have a big issue with is the lack of consultation with shareholders like me and the NZX's collusion with company management to allow them to bypass owners rights and give institutions preferences that smaller shareholders dont get. I would have said yes to company requests (sans the institutional favouritism) for more capital but I nevertheless should be asked in the first place.

I own part of these companies after all !

It has sent me into a kind of Bruce Sheppard mode on speed but there is very little I can do except make it known here that I am an unhappy camper.

As I said back in early January capital raising is set to become popular this year and it has by no means finished yet.

Nuplex Group [NPX.NZ], Fisher & Paykel Appliances [FPA.NZ], Kiwi Income Property Trust [KIP.NZ] and a whole host of other companies have already had out the begging bowl and I fully expect to have to fork out more myself although the bulk of my extra capital allocations have already revealed themselves.

Recent Share Investor Reading

• Im Buying: 2009
• Auckland Airport needs main focus on its core busi...
• Investors have reached a Tipping Point
• MarketWatch - Auckland International Airport
• Irving gives investor's perspective

• Discuss this topic @ Shareinvestor.net.nz

Related Amazon Reading


Raising Capital: Get the Money You Need to Grow Your Business by Andrew J. Sherman
Buy new: $24.23 / Used from: $4.77
Usually ships in 24 hours

c Share Investor 2009