Forum Archive Index - October 2000

[Mick Clifton <Mick.Clifton@eskimo.co.nz>]

hi mike
i'm a novice - so could you briefly tell me what would
happen to the price of FFS should it be recapitalised.
cheers 

-----Original Message-----
From: Mike Hudson [mailto:MHudson@placemakers.co.nz]
Sent: Monday, 9 October 2000 13:46
To: 'sharechat@sharechat.co.nz'
Subject: [sharechat] Insider Trading and FFS



Greg wrote

"I for one would give a great deal to know whether Dr. Deane has been buying
or selling FFS over the last 6 months." 

I would be very surprised if Dr. Deane, the Board or any senior executives
(the ones in the know) have bought or sold shares in any of the divisions in
the last six months. The rules, as Kerry Hoggard found out to his cost are
very strict about when transactions can take place and I am sure that the
embargoed period would have been extended to cover the whole of the
negotiating period.

In relation to  FFS GPT is correct when he says that the fate of all
divisions has to be decided concurrently, the cash flows of FLB and FEG are
keeping FFS afloat. If FFS can't be sold which is looking more unlikely
given the uncertainty over the CNI Partnership it will have to be
recapitalised and floated which could well mean a hefty rights issue or the
placement of a large tranche of new equity. This is probably what is putting
the wind up the retail investors.

The NTA is assessed as $1.69 but this does not mean a lot as the assets in
question cannot be readily realised. Anyway the valuation of forests is
notoriously difficult due to the need to estimate prices and discount rates
up to 30 years out.  The key indicator for FFS is not NTA but cash flow
which is looking sick.

Having said that the shares  look as they might be oversold and could be
worth a punt at around 60 cents

Cheers
Mike H 





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