Forum Archive Index - October 2000

["Richard Hooper" <hoop@ihug.co.nz>]

Thx for your report Snoopy.
Much appreciated
Hoop
----- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Tuesday, October 31, 2000 3:42 PM
Subject: [sharechat] The y2k BIL briefing


> A good turnout of what one observer quipped to be 'the former wealthy
> of Christchurch' turned out at the Christchurch Town Hall to see what
> could be salvaged from their BIL investment currently trading just
> above its record low share price.
>
> Most of the board members found good excuses not to be there, but Sir
> Selwyn Cushing, Hon Philip Burden and new MD Greg Terry were on hand.
>
> My first impression was, why had they appointed a 'giant' to head the
> company?   Mr Terry is a big fella, not grossly fat nor LA Laker
> tall, but overall big enough and tall enough to make one think twice
> about stepping into a wrestling ring with him.
>
> What followed was a very detailed analysis indeed of where the firm
> had come from and where the firm was headed to.  If you hadn't read
> the Annual Report before attending there were enough numbers and
> balance sheets to overwhelm any casual observer.   The key management
> team was on hand and several short talks were given on different
> aspects of the business.  Apparently BIL won some award in
> Singapore for transparency in reporting, and it looks like this very
> thorough and full disclosure of results is part of the new BIL
> culture.
>
> Greg Terry articulated the philosophy for the new BIL around three
> key trends.
>
> 1/Computers: Peoples desire to do less work will push more and more
> computer automation behind the scenes.   So BIL will be on the look
> out for existing businesses where this type of automation can add
> significant value to a business.
> 2/Leisure: People are going to travel more and be looking for quality
> leisure experiences.  So BIL will be looking to leverage value out of
> such things as Air New Zealands on line booking facilities, and on
> line booking into Thistle Hotels.  Thistle Hotels have been moved up
> market by a million pound a week refurbishment program.
> 3/Healthcare: People are wanting to live longer and in greater
> health, and again BIL plans to leverage more value out of such
> businesses using technology.
>
> So as I took it BIL will be seeking out undervalued businesses, not
> those that are asset rich like in the old days, but businesses  that
> can use technology to run more efficiently.   BIL is planning to
> look particularly at companies in the health and leisure sectors in
> Singapore Hong Kong Australia and New Zealand that can benefit from
> this kind of expertise.   It is this kind of 'adding value' that will
> become their new specialty.
>
> Of the existing legacy, Thistle Hotels is still the key to freeing up
> enough funds to really pursue this future direction with vigour.
>
> The UK sharemarket is hostile to hotels, with P/Es for that sector
> dropping from 12 to 8 in the last year.   Thus the only sure way to
> get cash out of this business which is trading at half its asset
> backing is to sell the assets.   The plan is to sell around 75% of
> the equity in the hotel properties to third parties, retaining just
> enough (25%) to have some owner interest.   Thistle will become known
> more for its management expertise, than as an owner of properties in
> its own right.   The plan seems to be to grow Thistle Hotels by
> effectively franchising the management expertise to other hotels
> not currently in the chain at all.  An interesting aside was that the
> average business traveller pays *twice* the room tariff, that the
> average leisure visitor pays.   This means business travellers and
> business conferences are key profitability drivers for Thistle.
>
> The Molokai Ranch 'leisure park' in Hawaii is as good as sold to a
> developer with the bags of cash that will be needed to really turn it
> into a significant resort.   Plans are in the wind to sell the rest
> of the undeveloped land on Molokai as soon as BIL can leverage some
> more value out of it, based on the fact that the money the new
> developer is pouring in will highlight the value of the remaining
> land.
>
> There may be a fillip to results in coming years results if some
> of the exit strategies that BIL are pursuing come to fruition.   I
> thought we had heard the last of Graham Field, but apparently it is
> due to come out of bankruptcy in 2002 and some residual value may be
> written back into the books then.  It is a similar story with
> 'Asiapower' which is being sold this year for some cash
> consideration, even though the book value of this investment is nil.
>
> There were only two bursts of applause during the 115 minute
> briefing.  Once when the head of NZ operations said
> that they have moved out of their Ivory Tower in Wellington and that
> two of the three floors had been sub leased.   The other was
> after Mr Greg Terry had summarized and brought together in a
> closing statement the different management presentations before
> question time.
>
> The past 10 months since Chinese new year has been almost entirely
> focussed on building the new management team at BIL.  As a result
> no excuse was offered for the fact that really all that had been
> presented was a vision with no runs on the board.  Mr Terry hinted
> that within 5 years he would no longer be there, as in his opinion
> by that time the company would derive more benefit from having an
> injection of new ideas from a new MD than by retaining him.  It is
> clear that the new management team do have big plans for the company
> and a tight timeframe in which to do it.  And whether Greg Terry
> stages a giant turnaround, or this new recipe is a giant mistake
> might determine whether he sails off into the sunset, or whether he
> has to fund his pension by donning tights and spending his last
> pre-retirement years in the professional wrestling ring.
>
> SNOOPY
>
>
> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
> "Dogs have big tongues, so you can bet they don't
> bite them by accident"
>
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