Forum Archive Index - April 2000

["Oliver Shapleski" <oliver.shapleski@vuw.ac.nz>]

I get the feeling not many people even understand the process of due
diligence, nor the complex nature of asset and liability ownership among the
Fletcher group.

The legal issues are huge!  Any company (and I've heard of one in particular
that isn't Norske) looking to buy one of the FC companies is taking a major
punt because it simply is not clear which assets and liabilities are to be
attributed to each division, and some A&Ls will be split among two, three or
all four.

Norske in picking up the first one may be able to "carve the cream" so to
speak, particularly when it comes to tax losses.  This means Norske may be
in the best position to take a punt on one more FC co to really ensure that
they extract full value from the two divisions.  That said, investors should
also consider the possibility of a hostile takeover of one of the divisions,
the closer the group gets to sorting out its balance sheet.  I've a feeling
there may be one or two parties undertaking "due diligence" that are unknown
to FC (I insert the "" of course because hostile buyers never get the
opportunity to carry out the real due diligence process).
If that's the case, then a hostile buyer would want to put an offer out far
ahead of the offers from "more agreeable" suitors - my reasoning leads me to
the conclusion that a low-end bid of $1.10-$1.20 may be on the cards in the
next fortnight for FFS, being a couple of weeks ahead of any bid by the
likes of Norske.

QED I'd take any comment from FC PR with a grain of salt - they don't
necessarily know everything...!

Discl: Don't hold any FFS, FLP, FLB or FEG but if I had some cash I'd be
putting $1 each way on two of the remaining three.




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