Forum Archive Index - March 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

Re RUBICON:

 

1.My rough valuation.

Please refer to Rubicon's Investment Statement, page 78:

 

Shareholders equity: $ 312 mill.

 

Deduct: $NZ 6 mill arising from a lower price for the remainder of Capstone shares.

 

Deduct $NZ 25 mill. from the " Purchase of fixed assets ", bought partly from FSS. ( In my opinion, the South American assets should never have been bought by FSS - or FLB ).

 

There is an existing Intellectual Property dispute with Genesis.

 

At the current price of 34 cents / share, the paper profit on the acquisition and underwriting of Forest shares is appr. $ 12 mill.

 

There must be costs to set up office; there may be hidden costs as well. I can't find a reference to these costs: Deduct $ NZ 2 mill.   

 

Total deduction $NZ 20 mill.

 

Net equity $NZ 291 mill. Number of shares: 353.2 mill.

 

Net tang. asset value / share 82.4 cents ( against 88 cents in the prospectus ).

 

2.Possible market prices.  

There won't be any dividends for some time to come; forestry is at the bottom of the cycle and any income may well be spent on research. It is difficult to assess the monetary value from these projects.

 

Taking these factors and the bearish market into account, one would allow at least a 50% discount to the net asset value to arrive at a market price.

 

One could expect a market price of up to 41 cents.

 

There will be a large number of shares on offer and this will depress the already low market price furher. Prices could fall below 35 cents during the first week.

 

3. Sale of assets.

Ideally, most of the assets should be sold off and some of the proceeds returned to shareholders.( I don't think that the Directors will approve of such a scheme! ).

 

However, if the price of Rubicon falls too much, then,  GPG could take over and complete this job!!

 

4. Exposure to Forest shares.

Rubicon holds 492 mill Forest shares ( or 17% ? ) and this is a strategic parcel.

 

A rise or fall of 1 cent in the Forest share price= $ 4.92 mill.= 1.39 cents per Rubicon share! 

 

The price of the stand-alone Forest shares on Monday, will be interesting! 

 

A succesful conclusion to the dispute with the Chinese or the sale of Forest, will also be beneficial to RUBICON !! 

 

Gerry

( Does not hold Rubicon )