Forum Archive Index - October 2000

["Malcolm Eves" <malcolm@easternasset.co.nz>]

The Shell/Apache deal was always going to be tricky. I alluded to this in a previous post when I said that there was a lot of water to yet go under the bridge (or similar). Similar to the sale of NZ forest assets to foreigners it is equally unpalatable for NZ energy assets to be owned by a foreign company so it was going to be down to the wire in any event. Two of the brokers I spoke to were negative about commerce commission approval after the announcement was made and a fund manager I spoke to was neutral at best so I am not surprised.

Both the brokers are now sure the Shell deal is dead in the water (for what this is worth) because it was apparent that the delays were Shell making concessions along the way to appease the commission. Therefore to answer the question as to what I think of Dr Deanne, I would say that the he and the Board are looking particularly silly at the moment and feeling foolish. To me, to gamble an announcement of such magnitude, I would have thought that you would need to be sure first and clearly they have misread the commissions feelings or concerns or maybe at the last minute a serious dose of political leaning was brought to bare on the commission.

That is not the issue for me as an investor because I  prefer FEG as a standalone company because of the profitable assets it employs. After all the Pohokura field was yesterday declared a much bigger field for a start. The Capstone investment is likely to be sold at a good price and the Canadian business is still profitable and saleable, e.g.. Capstone for NZ$1bn; Canada to Apache for NZ$1.5bn etc making FEG a  good share to own in it's own right. I have a good feeling about FEG not any particular individual or board.

For the balance of the Fletcher Group it's not good. FFS needs money now and the Board has signaled by this weeks actions that there is a serious issue at the heart of FFS underperformance. The commission turning down Shell is likely to make it harder for the board now as shareholders are attuned to the fact that FFS has significant debt worries and  that this should now be addressed alone by FFS and with no help from a cashed up FEG group.

I am no admirer of Deanne or anyone for that matter because Carters, Fletchers, Brierleys you name it have been destroying shareholder wealth for NZ investors for years and I probably see this as an attempt at least to break the cycle and restore shareholder returns. It was a bold move and filled with danger due to the intrinsic nature of the assets. It's backfired and I am annoyed about the expense so far, just as Fletchers wasted all that money trying to do a reverse takeover with the Paper assets not long ago for no result at the time. I'm also disappointed that an announced deal that has had such ramifications for the other Fletcher stocks and the market in general has been thwarted. This indicates a lack of understanding by the Board and/or last minute political intervention. Don't know. It tells me that the group structure is bad and it has to be dismantled. If I own a Fletcher share do I own one that has trouble or do I own one that has got less debt liability, is profitable and has sought after assets. That is the question for me to answer not whether I admire Deanne or any other board member. I hope this answers your query. Thanks. 

 

----- Original Message -----

From: Ted

To: sharechat@sharechat.co.nz

Sent: Friday, October 13, 2000 8:57 AM

Subject: Re: Re: Re: Re: [sharechat] Attention All Lawyers

Malcolm E, Moose and Mike Hudson - you're welcome to reply to this thread again. I will be more than interested in your current comments. Do your previous feelings of goodwill and admiration still apply to Mr Deane???????