Forum Archive Index - December 2000

[Gerry Tyler-Smith <g.tylersmith@ext.canterbury.ac.nz>]

I,  too,  keep wondering who are the buyers of all those rights, some are
selling in 78 million lots ... is that what underwriters do, to pop up a
rights issue?  Or are these rights buyers Citic, or Weyerhausen, or Norske
Skog, who logically would see this as an opportunity to buy much more
cheaply what they have already offered to buy?  And I keep wondering why
Ord Minnet is pushing its clients and the public so hard to take up the
rights issue... they are now owned by Chase Manhatten ...Does Chase
Manhatten have any affiliation with Credit Suisse First Boston (the
underwriters) who must be growing a trifle concerned at having to fund
three quarters of the rights issue?

Judging by what happened post-issue with Air NZ, with the share price
plunging, I keep thinking that FFS will also plunge post-rights. (recall
Roderick Deane sayign that the reason why FFS wasn't sold, was that
prospective buyers were put off by the Citic dispute, which is now raging
hotter and heavier).

The problem with taking up the rights issue, is that you are so locked in
to that 25 cent price, ie, you can't average down, to ultimately recoup
your losses. The underwriters are publicly admitting that they will
probably have to take up over seventy-five per cent of the rights, and
considering that as soon as the rights issue closes, the preferential
rights will be trading, the underwriters probably have those rights already
(have I got this wrong???).  I can't see any advantage is paying top price
for preferential shares, considering it is so highly improbable that the
entire company of FFS will ever go into receivershp (barring Taupo erupting
again, or Asian Gypsy moth infestation, or Russia strip felling its entire
Siberian forests, and flooding world markets with cheaplogs etc.)





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