Forum Archive Index - November 2000

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

There has been a few questions about what to do regarding taking up the FFS rts. and concern about CITIC.

For those who had nil exposure to FFS before the restructure announcement the "blood on the floor" represents a great opportunity to buy assets at undervalued prices. Also for those who feel like it is their blood on the floor it would be better to take up the rts. and not let them lapse so as you maintain your position in a company that will reappear as a different entity to the one that required rescue. With debt lowered to less than 25% after recapitalisation there is a different future for the company. You have to see through that.

Another issue is the misinformation about the claim by CITIC. The claim by CITIC is in the name of the partnership (CNIFP) and not CITIC so any claim by CITIC reduces the magnitude of the claim by 50% as 50% of the claim is to the benefit of FFS. Interestingly Dr Dean said on Friday that he believed CITIC would make an 11th hour bid to inject further capital into CNIFP which IF he is right will be beneficial to FFS. Every dollar that is injected into CNIFP is adding value to FFS so it is important not to lose sight of the potential recovery you could experience in the future with a recapitalised company. To dilute your recovery experience by letting the rts. lapse would not be a good idea. I think the future will bring a lot higher price so don't water it down. 

Not a perfect dissitation but may be helpful to some.