Forum Archive Index - October 2000

["Grant Keymer" <grant@jenlogix.co.nz>]

Arkadii,

 

In answer to your questions:

 

>I understand that there will be no trading in rights.

 

The rights issue will be definitely be tradeable in the same way as Air New Zealand's rights which are currently being traded under AIRRD and AIRRE ticker codes.  SPE's rights issue earlier this year was also tradeable.  But the trading period is limited as per the announcement on Tuesday:

 

2 November      Annual Shareholders' Meeting, which will also consider
Forests rights issue_
Mid-November    Rights trading commences_
Early December  Rights offer closes _

 

>And what does it mean that they will rank in priority (as to the amount of their issue price of NZ$0.25 per
share)?

 

If FFS is liquidated, the Preference Shares (which are obtained by paying the application fee of 25c per rights issue share), take precedence in payout to the ordinary shares (existing before the rights issue).  The sequence of events would be as follows:

 

1)  FFS liquidated

2)  Preference Shares receive 25c payout

3)  Ordinary Shares receive 25c payout

4)  Whatever is left is divided equally among Preference and Ordinary Shares.

 

Of course the money might run out at any stage of the process, so Preference Shares are first in the queue.

All the above is probably of academic interest only because what is the likelihood of FFS being liquidated?

They have plenty of asset backing, although as previous posts have mentioned, it might not be easily realised at any given time in the future.  Equally, I think it's safe to say that the assets could be realised over a reasonable timeframe, such as might occur if FFS was sold as a going concern rather than being liquidated.  A highly preferable result I'm sure you'd agree which might result in a nice windfall to those shareholders who had stuck with FFS.

 

>Will they be 25c cheaper?

 

No, sorry.  Although I guess it's true to say that getting an extra 2 FFS shares for 25c each is not a bad deal.  That's if you haven't been burnt by paying too much for your existing shares.

I hope my explanation has been of help to you Arkadii.

 

Cheers

 

Grant Keymer
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