analysts applaud mfs ceo appointment

First Positive Headline I've Seen Since CIY Merger Proposal!!

And of course when White makes his announcement in the next few days and it's positive, the journos can then say 'we told you White was the right man for the job!'

Analysts applaud MFS CEO appointment


Property funds manager MFS Ltd has ejected its chief executive in a bid to appease investors, after being roundly punished by the market last week.

It named deputy chief executive Craig White as its new boss, following the resignation of Michael King.

MFS shares remain in a trading halt, following the group's 70 per cent plunge on Friday on concerns about an unexpected $550 million fund raising to pay off debt.

The trading halt was requested on Monday as MFS mulled unsolicited proposals from a number of parties about buying a majority interest in its Stella tourism business.

Travel agency group Flight Centre Ltd denied it was one of the parties seeking the Stella business.

But in another blow, rival City Pacific withdrew an offer to buy MFS's financial services business after the parties were unable to reach agreement during talks over the weekend.

City Pacific was trying to salvage its after MFS announced on Friday that it would proceed its own to demerge and separately list Stella and the financial services arm.

Investors had reacted savagely to the demerger plan, because MFS also needed to raise $550 million in equity to pay down debt, in a market already jittery about debt events.

MFS said the devastating reaction spurred its decision to dump Mr King in favour of Mr White.

"Following the market's reaction to the de-merger proposal released on Friday, it was considered to be in the company's best interest that Mr King resign as chief executive officer, effective immediately," MFS said.

"Mr King has voluntarily foregone his right to be paid compensation and entitlements under his service agreement following his resignation."

Analysts were gratified by Mr King's ousting, saying Mr White would appease disgruntled investors and bring confidence back to the market for the beleaguered company.

"It is not surprising considering the market's response," Fat Prophets senior equity analyst Greg Canavan said.

"It was handled very badly and the best course of action was to let Michael King fall on his sword."

Shaw Stockbroking analyst Brent Mitchell said Mr White's ascension was well received because of his broad experience, particularly in funds management.

"A lot of institutions know him and the move should go some way towards appeasing shareholders," he said.

"The market recapitalisation proposition was one of King's ideas, but this appointment will enable them to maybe scratch that or change it significantly."

UBS said the financial services and tourism businesses were strong performers.

"We believe ultimately that MFS and Stella are viable businesses and represent substantial value," UBS analyst said in a client note.

Asked if the company's low share price represented an investment opportunity, Mr Canavan likened the stock to catching a falling knife.

"Investors could either catch it on the downside or on the bottom of the blade," he said.

But Mr Mitchell said while there was "quite a bit of nervousness about possible heavy debt margins", MFS was a buying opportunity.

"I believe the company represents a favourable opportunity on its merits," he said.

"The company has explained that it still has strong growth aspiration, but this was poorly received in market and I believe a group debt of $1.5 billion is not a real funding problem."

UBS suggested last week's sell off may have been overdone and placed a "buy" recommendation on the stock.

But it also noted the recent price fall presented a risk.

"The precipitous fall in the MFS share price now poses a serious risk to the MFS retail funds management business," UBS said.

MFS shares last traded at 99 cents.