Forum Archive Index - January 2001

[Mike Hudson <MHudson@placemakers.co.nz>]

I am trying to decide whether to quit FEG or to hang on till the break up.
My gut feeling is that there is an upside to holding on as we could be in an
FFS type situation with many small shareholders getting out on the advice of
their brokers or simply because the deal is just too complicated.

As of today the Shell component is worth $7.42 and the Capstone $0.95 =
$8.37

The current price of FEG is $8.36. Obviously there is uncertainty about the
CPST price and currency movements and there is an opportunity cost factor on
the use of the funds but basically as it stands now you are getting Rubicon
for free. 

So the question is, how much is Rubicon worth? FCL valued it at
approximately $1.20 when the first separation announcement was made in
October. I had a newsletter from a broker the other day ascribing a value of
26 cents.
The answer is no doubt somewhere in between. But where? It is a moveable
feast as its value will fluctuate with that of FFS.

Has anyone out there got an opinion on this one?

A reminder of the original announcement

The new company, Rubicon * Will be established, on separation, as an active
business with a defined strategy to commercialise emerging new technologies
that have high-growth, high-margin potential.

 * Will play an important role in the restructuring process, by supporting
the recapitalisation of the Forests Division, and acquiring some Energy
assets. 
* Will initially consist of:
*       The biotechnology assets and South American forestry assets acquired
from the Forests Division for a combined price of $80 million   
*       The Challenge! service station network of strong New Zealand small
businesses, and the Brisbane, Timaru and New Plymouth terminals which
support them, acquired for $20 million  
*       14% of New Zealand Refining Company shares      
*       $20 million in cash     
*       An alliance with Genesis Research and Development in relation to
bioremediation  
*       Commitments to subscribe for a placement of $90 million of Forests
shares and also to sub-underwrite $170 million of the Forests rights issue


Cheers
Mike H
    

 



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