Forum Archive Index - August 2000

["G.P.Thompson" <gp.thompson@bitworks.co.nz>]

Les Charlie, Mike, Roy  etc

Lets look at the situation with FFS

 

Well the results came out, and they were OK . In fact they were pretty good across the whole group.

The Net Assets for FFS improved from $1.39 per share to $1.69 yet it trades at 83 c today.

FEG on the other hand has net assets at $7.28 and trades at $8.90. (We know there is the unrealised component of the Capstone factor here which was capitalised at $781M as at 30th June but is now reported to be worth twice this or a further $2 per share).

In reading the articles today and listening to Rod Deane it is clear that the whole process is building to a climax sometime soon. They are well down the due diligence track with the serious contenders now.

The tire kickers have departed.

The key seems  to be the Commerce Commission approval for Shell which is delayed. It has been suggested that FFS must be dealt with first as its interest costs  are underwritten by the cash flow of the other two divisions.

 

Of note is the statement that if the split is accomplished prior to 29th Sept then the dividend will not be paid. As 10 days notice is required a deadline of 19th Sept is foreshadowed.

The CITIC matter also goes to court on the 19th Sept.  They have indicated that resolution of the dispute with CITIC while desirable is not essential. CITIC have to be bidders for FFS so if they get the nod then they will end up in dispute with themselves.

As for the rumour that recapitalisation is preferred it  has to be put alongside all previous rumours which have come to nought. Is it the thought of a cash issue that is causing the sellers to quit?

While I obviously wished I had taken my own (and other's) advice and sold at 90 c last week there was always the chance that a sale announcement could have pushed the price substantially the other way.  After all the shares are still trading at half their NTA. I'm content to sit tight for now.

GPT