Market News 7 July 2025

Johnny Lee writes:

Metro Performance Glass’s sorry story continued last week, with the glass supplier finally publishing details of its long-awaited recapitalisation plan.

The company intends to raise up to $24 million from a combination of existing and new shareholders, at a price of only 3 cents per share.

Shareholders may recall that this is not the only corporate activity taking place within the company.

MPG received a non-binding proposal in December last year, seeking to buy the entirety of the company at 8 cents per share. Importantly, the proposed offer was from a major competitor, Viridian.

Rightly or wrongly, MPG did not pursue the proposal. At the time, the company considered three major factors when coming to this decision:

Firstly, MPG was concerned about the risks related to allowing a competitor to conduct due diligence on the company. This is customary for takeovers, but in the case of a direct competitor, would naturally yield commercially sensitive information and would require strict controls.

Secondly, MPG considered a lengthy regulatory approval process would be detrimental to the company, effectively forcing it to pause its strategy as the takeover process played out. 

Lastly, MPG also believed such a takeover would inevitably fail to gain Commerce Commission approval, based on two major competitors merging within the same industry.

Ultimately, the offer was rejected by the MPG board.

This has not deterred Viridian, which has recently applied to the Commerce Commission for approval to acquire MPG. Time will tell whether this proceeds further.

This information is to provide context to the situation Metro Performance Glass now finds itself in.

MPG is now raising at least $15 million (up to $24 million) of new capital at 3 cents per share, a steep discount to the last traded price of 4.9 cents. At least $6 million of this will be raised directly from a new shareholder, Amari Metals, which intends to become a major shareholder of the company.

Such a significant placement will require shareholder approval, with a meeting planned for late August. Shareholders will need to determine whether the dilution and surrendering of some control to Amari Group is worth the potential upside this external capital and relationship may bring.

MPG will solicit an independent view on the offer from Grant Samuel, to assist shareholders with the vote.

Metro Performance Glass has struggled since listing.

After debuting in 2014 at $1.70 per share and a valuation of over $300 million, the company’s market capitalisation has now sunk below $10 million and is one of the smallest companies on our exchange. It dwells with the likes of the medicinal cannabis companies and the empty “Reverse Takeover” shell companies.

The company saw a net loss after tax this year of $13.5 million. Ten years ago, the company made a profit of $9.6 million and paid a dividend of 3.6 cents per share.

The vote next month will be a critical one, and shareholders may find neither option palatable. One way or another, Metro Performance Glass will face a major fork in the road. So far, that road has been anything but smooth.

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The Warehouse has provided a brief trading update, as the company continues to struggle in a difficult retail environment.

The company has been making more regular updates of late, with a noticeable effort to keep shareholders informed.

The third quarter saw sales growth of 2.2%, however the fourth quarter of the financial year – which ends in four weeks - has been challenging. Consumer wallets remain closed, competition is fierce, and margins are tight. 

This broadly aligns with the other retail stocks, which have reported similar conditions. While Briscoes and Hallenstein have both held their ground, the likes of Michael Hill, Kathmandu and The Warehouse have seen steep falls in value, in a year when the broader market has been flat.

The Warehouse also updated guidance, indicating it is now expecting the full-year earnings result to be in the range of a $5 million loss and a $5 million profit. Last year’s result was a substantial loss, after the write-down of the Torpedo7 asset.

As the company stated in its half year result, “we aren’t relying on an economic recovery to fix our business”. The company is actively trying to reduce costs, improve inventory management and cut debt.

Ultimately, a company cannot trend downwards indefinitely. 2022 saw a 49% decline in net profit. 2023 saw a 56% decline. 2024 saw a 67% fall. 

The update from The Warehouse is another data point showing the retail sector continues to face significant headwinds. Competition is tight, and consumers are still not returning to brick-and-mortar stores. 

Hopefully, the second half of 2025 will show more signs of recovery for the beleaguered retailers.

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Santana Minerals has updated its November Pre-Feasibility Study, accounting for the latest findings and valuations.

The gold price has climbed since the November report. November’s report was based on a spot price of A$4,000 per ounce, with the latest update priced at $4,950. Of course, this will fluctuate during the mining process, but last week’s snapshot is based on this figure.

Reserves were also updated.

This has obviously meant a steep increase in all metrics: revenue, free cash and taxes paid. 

First gold is still planned for early 2027, with the timeline updated following the recent delays. It now sits at the end of the first quarter of the calendar year – late March.

All of this, of course, assumes a successful completion of the consenting process. The company notes that the submission is imminent.

Santana had one other update last week, announcing a conditional purchase of the neighbouring Ardgour Station land.

The total cost of the acquisition was NZ$25 million, with $2 million of this acting as a non-refundable deposit. Settlement is subject to project consent. $5 million of the $25 million will be settled by a placement of shares in Santana Minerals. 

While this was a brief announcement, it secures freehold ownership of the land which covers most of the infrastructure for the development and removes another risk from the project.

The purchase of the land will also remove the gross production royalty (1%) for a significant proportion of the orebody within the various deposits.

Hopefully, the next announcement will not be far behind!

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The Contact Energy takeover of Manawa Energy has received final approvals and takes place this Friday, 11 July.

All shareholders will receive $1.12 cash, and 0.583 Contact shares, per Manawa share held. Note that this ratio is slightly higher than the Initial Exchange Ratio quoted in the November announcement (which was 0.5719 shares).

Bondholders will be repaid “as soon as practicable” from this date.

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Travel

Lower Hutt – 9 July – Fraser HunterChristchurch – 23 July – Fraser Hunter

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Chris Lee

Chris Lee & Partners