NZME board battle ends as Grenon and Joyce nominations backed
A truce has been reached in NZME's boardroom battle, with shareholders settling on a proposed new governance structure that will likely be chaired by former National Party MP Steven Joyce and include Canadian ex-pat James Grenon.
In a note to the stock exchange this afternoon, NZME announced the
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Problem-plagued convention centre subject of new legal action
SkyCity Entertainment's decision to file legal proceedings seeking $330 million in compensation from Fletcher Construction for losses arising from delays to the completion of the NZ International Convention Centre was always going to be a case of when not if. And judging by the market's muted reaction to the news, there appeared to be little surprise among investors given the share prices of both companies barely reacted following the announcement. Fletcher Building shares closed on Friday down 2.5 percent at $3.07, while SkyCity shares ended the week down 1 percent at 94c. It's a far cry from May 2013 when SkyCity and the government announced with great fanfare that a heads of agreement had finally been reached to build the long-talked-about international convention centre at a cost of what was then estimated at $400m, with an expected completion date of 2017. At the time, Fletcher Building shares were trading at around the $8 mark and SkyCity Entertainment at $4.50. Economic Development Minister Steven Joyce confidently projected the convention centre would provide a $90m annual injection into the economy as well as creating an estimated 800 jobs on completion. Fast forward to today and it is difficult to think of any building project in the nation's history that would come close to rivalling the convention centre for the litany of problems that have plagued its completion from beginning to end. From significant cost blowouts, legal disputes, protracted delays, construction defects as well as a disastrous fire that took a week to extinguish and required almost a complete rebuild of the buildings inner core, it's difficult to consider what more could have possibly gone wrong for a building project that has seemed cursed from the outset. With a newly revised completion date that will finally see the building open in February next year – nine years later than originally planned and with a final cost estimated at around $900m, more than twice the original estimate – Fletchers must be rueing the day it decided to bid for the contract. Not only has it cost the company dearly in both financial and reputational terms, but it has also contributed to the resignation of former chairs Sir Ralph Norris in 2018 and Bruce Hassall last year. And added to the above final completion cost, if you take Joyce's 2013 estimate of economic benefit at face value and deduct a couple of years for the Covid pandemic when the conference market was effectively mothballed, the earnings forgone from the delayed opening amounts to a further $500m cost to the economy, and SkyCity earnings in particular. It's not hard to see why the company feels aggrieved by the totality of the impact all of this has had on its business which is reflected in its share price now trading at a 25-year low. For its part Fletcher Building argued in its statement to the NZX on Friday that it had already paid significant liquidated damages to SkyCity in relation to the delays in delivering the NZICC in accordance with the building contract. 'Accordingly, Fletchers will vigorously defend itself against the SkyCity claim for further liquidated damages beyond the capped amount provided for in the building works contract.' Though Fletchers acknowledged that the delivery of the convention centre had 'suffered from a number of challenges' it 'absolutely rejected' the claim by SkyCity that it was in breach of its contract in the manner alleged. Attempting to put a positive spin on the matter, Fletchers concluded its statement by adding it was confident that 'once the NZICC is available to be seen and used by the public and international guests they will be delighted with the quality of the asset that will make a meaningful contribution to the NZ economy'. For SkyCity Entertainment shareholders that will come as cold comfort for a business that has paid dearly for a project that was supposed to be open nine years ago, while for Fletcher Building shareholders the handover can't some soon enough. Though, if SkyCity proves to be successful in its legal action, it will come with a final and potentially nasty financial sting. As always, the only winners out of all of this will be the lawyers who must surely be buoyed at the prospect of two of NZ's largest companies going head to head in the courts given the substantial billings that will result. It promises to be a closely followed case with significant implications for both sides and will no doubt expose further details of a project that, for all its supposed aesthetic value, will forever be seen as a national embarrassment of incompetence, mismanagement, and neglect. Markets push higher as investors remain optimistic Equity markets in the US and Australia are now within striking distance of eclipsing their all-time highs, while locally the NZX50 remains 5 percent below its December 2024 high and 8 percent below its all-time high from January 2021. In the US, the benchmark S&P 500 index closed on Friday at exactly 6,000 needing just 147 points to take out its previous all-time high set in February. In Australia it's a similar story with the ASX200 now just 100 points below its all-time high. Locally, listed property stocks received a small boost despite Stats NZ's March quarter data on the value of building activity revealing a mixed picture. Residential building work increased by 2.6 percent, while non-residential work decreased by 3.9 percent, resulting in a flat total building volume on a seasonally adjusted basis. Elsewhere, Ebos Group recouped most of its earlier losses after its free float increased following a sell-down by longtime major shareholder Sybos exiting its stake and selling nearly 27m shares for $949m. NZME shares closed out the week unchanged at $1.19 despite a significant board shake-up in which former radio entrepreneur and Cabinet minister Steven Joyce assumed the chair of the listed media company while activist shareholder Canadian billionaire Jim Grenon, now a New Zealand resident, and whose actions sparked the whole saga, was also elected as a director. Meridian Energy shares gained almost 5 percent for the week to close at $5.86 after announcing New Zealand Aluminium Smelters' plant at Tiwai Pt in Southland will ramp up production sooner than expected, thanks to improved hydro lake storage levels. The smelter has an agreement with Meridian that enables the power generator to request Tiwai, the country's biggest power user, to reduce production when the system is stretched. Meanwhile, the Paris-based Organisation for Economic Co-operation and Development (OECD) issued its latest report on the global economy saying that it expected growth to slow from 3.3 percent in 2024 to 2.9 percent in 2025 and 2026. The slowdown is expected to be most concentrated in the United States, Canada, Mexico and China, with smaller downward adjustments in other economies. In its report on New Zealand, the OECD acknowledged that though an economic recovery was under way, the country would need to battle increasing trade headwinds. It expected the expansion to continue with growth projected to rise to 0.8 percent in 2025 and 1.7 percent in 2026 supported by lower interest rates. 'However, increased trade restrictions and high uncertainty about trade policy globally will temper external demand, confidence and the pace of the recovery,' it said. It forecast inflation would ease because of lower oil prices and higher spare capacity including in the labour market with unemployment expected to peak in late 2025 at about 5.4 percent. The OECD said the pace of fiscal consolidation was appropriate but may need to be slowed if the expansion stalls. In the US bond yields rose after monthly jobs data for May allayed concerns of an imminent economic slowdown, while equities also gained amid hopes US-China trade tensions are easing after US President Donald Trump confirmed that much-anticipated negotiations will begin tomorrow (US time). Though US job growth moderated in May (139,000 new jobs verses 125,000 forecast) and the prior months were revised lower, the news bolstered investor sentiment that had been primed for disappointment after data last week raised doubts about the buoyancy of American hiring. Trump and Musk urged to repair their acrimonious break up It all started off so well. The ambitious and unconventional US President Donald Trump and Elon Musk the world's most successful and wealthiest tech entrepreneur teaming up to Make America Great Again. But it was always going to be a 50/50 bet that their relationship would survive with several commentators giving the 'bromance' less than six months before their respective egos got the better of them. And so they have been proven correct after an acrimonious tweet storm erupted on Friday (NZ time) that has left the relationship in tatters and the two sides refusing to speak to one another. At the centre of the break-up are plans by Trump to implement further tax cuts and fiscal spending that will significantly ramp up the national debt by as much as 10 percent at a time Musk has been focused on eliminating wasteful government expenditure and reducing the deficit. Allies have urged the two sides to repair their now badly damaged relationship, seeking to limit the political and commercial fallout from last week's spectacular break-up. The fracturing of the relationship between the powerful pair threatens to derail the White House's legislative agenda and wreck a hard-won alliance between Silicon Valley and Washington. 'It is unfortunate … I hope they will come back together,' Texas Senator Ted Cruz, who was in the Oval Office when Trump slammed Musk, the Financial Times reported over the weekend. 'A lot of conservatives are feeling like this is not good, let's hug and make up.' The Tesla chief, who had spent last Thursday launching more explosive attacks on Trump, seemed to be open to a détente. However, Trump on Friday claimed he was 'not even thinking about Elon', before adding on CNN: 'The poor guy's got a problem … I won't be speaking to him for a while I guess, but I wish him well.' He repeated that line on Saturday, telling television network NBC he had no intention of mending their relationship. Further, Trump warned of 'serious consequences' if Musk funded candidates to run against Republicans after a poll of his 220 million X followers musing about forming a new political party in the US. Tech figures who backed the administration hoping it would usher in an era of tax cuts and deregulation have been racing to contain the quarrel, with limited success. 'Elon isn't taking calls from anyone,' one Silicon Valley financier and big donor to Republican candidates told the FT. 'Not from people who have billions invested in his companies … The Valley is losing their shit.' Attempts to get Trump to reconcile with his former 'first buddy' received a further set-back on Friday morning after news the president planned to sell or give away the Tesla he had bought in March as a show of support for Musk. The White House also dismissed reports of a conciliatory phone call between the two men. Cracks in Silicon Valley and Washington's marriage of convenience had been appearing for weeks, particularly over Trump's tax bill which irked Musk. Deficit hawks have balked at the legislation adding trillions to the US debt pile, while more socially progressive tech figures have bridled at proposed cuts to entitlement programmes such as Medicaid. Musk's allies aligned with Trump fear several Silicon Valley figures who followed him into government could find their roles are in peril. The sudden deselection of Jared Isaacman, a tech founder and friend of Musk's who had been nominated to lead Nasa, was the start of an expected 'purge', said one person close to the administration. It was also another expensive week financially for Musk with Tesla shares falling almost 15 percent in the wake of the breakup with Trump and the expected loss of valuable tax rebates for buyers of EVs. As a result, Tesla shares recorded their worst week so far this year wiping a further US$152 billion from the company's market capitalisation with the shares now down 22 percent year-to-date. Coming up this week Monday Business Employment and Financial Data (Mar qtr) – Stats NZ Tuesday Scales Corp AGM Wednesday Migration & International Travel (April) – Stats NZ NZ King Salmon AGM Thursday Electronic Card Transactions (May) – Stats NZ Local Authority Stats (March qtr) – Stats NZ Friday
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a day ago
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America's foreign student fiasco
One of the world's best universities, a magnet for the globe's brightest brains, is under attack by the Trump administration. And while Harvard is fighting various funding restrictions and bans on foreign student visas, harsher policies on America's borders are creating fear from returning students that they could be arrested by immigration officers and jailed or deported. International students are big money-makers for universities worldwide – in New Zealand they pay four times the amount in fees as domestic students. 'We could be doing well while doing good,' says the chief economist at the policy think-tank The New Zealand Initiative, Dr Eric Crampton. 'It's amazing that America's throwing all this away. 'We aren't the destination market for the best students in the world. But if the place that is the destination for the best students in the world suddenly says 'We don't want them any more' – my God we'd better be ready for that,' he tells The Detail. Crampton is Canadian, but spent time in the US on a student visa so knows what it's like to study there. He's also taught at Canterbury University and has experience with exchange students. He says the American administration has now basically put every student visa under threat, with erratic threats coming from the President, whether over funding or threats to Chinese students on the basis that 'they're all spies or something'. Trump's move to bar international students from Harvard by blocking their visas has itself now been blocked by a court order, but the situation remains uncertain. At the same time foreign students are getting nervous about leaving the country and trying to get back in, with reports about people getting arrested randomly at the border. The hit to the US economy is expected to cost billions in revenue, and has been described as an 'anti-intellectual spree'. 'When you live in America on something like a student visa, every interaction with the state you're reminded that you're less than an American. Even in 2002 it was very clear that you are there by their sufferance. 'It would be awful being there now on a student visa because just imagine it … you'd be paying $US50,000 per year in international tuition fees, maybe you've already paid for two years of study and you're coming towards the end of it … and you've got two more years ahead of you … if they cancel your visa you've wasted $100,000 and two years. 'If you're at a place like Harvard, people wouldn't hold it against you, you could continue your studies elsewhere. People would say 'Well, he was admitted to Harvard, he must be really good', but if you're at a mid-tier US university – which is still better than anything New Zealand has – you'll have sunk two years' worth of study and $100,000 worth of cost, and you won't be able to finish your degree. 'It feels like the kind of spot where New Zealand could help. We've always been able to accommodate students on international exchange. We could make it really easy for students to come in that way.' Universities New Zealand chief executive Chris Whelan says New Zealand is nearly back up to pre-Covid numbers of foreign students, with our eight universities having about 20,000 full-time equivalent students between them. 'International students help, but they're just one of a number of different mechanisms that universities are looking to for making payroll and keeping lights on,' he says. 'We don't want to grow too far … we want international education to be a genuinely quality and value proposition for both domestic students – giving them the ability to rub shoulders with people from different cultures – but also for the international students, to give them a genuine international experience. 'But if any student did want to, or was forced to, discontinue their studies in the US, there are places like New Zealand that I think would welcome them and would make it as easy as possible for them to get here.' Check out how to listen to and follow The Detail here. You can also stay up-to-date by liking us on Facebook or following us on Twitter.
