Forum Archive Index - March 2001

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

Readers,

 

We refer to FFS and FFSPA when we talk about Forest shares.

Please read my disclaimer at bottom of page.

 

1.How does the value of an RBC share relate to those of Forest shares?

 

My post of March 24: " Market...... An opinion ", states that for every cent rise in the price of Forest shares, RBC could rise by 1.4 cents.

 

Conclusion: Buy RBC instead of Forest shares!

 

2. What is the value of RBC assets?

Page 79 of their prospectus refers to their biotechnology assets and related intellectual property as well as forest operations in South America, at a Directors' valuation of $ 80 mill. I reduced this to $ 55 mill.

Their research is of high quality and their data bases are irreplaceable.  

 

They have the Challenge service stations, worth about $ 20 mill.

 

They also hold 492 mill. Forest shares @ say 34 cents / share or $ 167 mill. This is a strategic stake: 17% of Forest shares!

 

They hold $75 mill. in term assets including intangibles. There are some capstone assets and assets / liabilities. Say a total of  $ 49 mill. in net assets. 

 

Total net assets therefore amount to 291 mill. as stated in my rough valuation in my post of March 24.

 

3. How much of this can be realized in CASH?

As much as appr. $200 mill. cash could be realized and RBC would be left with their BIO assets, a total of $ 55 mill. and term assets worth say $ 36 mill. More cash could be raised by liquidation of term assets. 

 

4.What is the present market capitalisation of RBC?

It has 353 mill. shares. Based on the current price of 47 cents, the market value = $ 166 mill. Note that the value of the Forest shares alone is some $167 mill.! 

 

5. Will RBC be attractive to a predator?

It could be!! Item 3 mentions that a predator could raise $ 200 mill. CASH. This can be used to finance a take-over.

 

One could pay up to 57 cents / RBC share to spend $ 200 mill. and still have the other assets as discussed in item 3. Obviously, prior arrangements re disposal of the Forest shares need to be made.

 

6. Is it possible to raise more CASH from disposal of Forest shares?

As mentioned, RBC holds a strategic stake in Forest shares; developments could increase the cash component!

A 10 cent rise in the price of Forest shares = $ 49 mill. or 14 cents / RBC share!! 

 

7. Conclusion.

I am satisfied that at this stage, investing in RBC could be more rewarding than investing in Forest shares !!!

 

Gerry

Disc.: Holds RBC 

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Disclaimer. The reader is not asked to buy, hold or sell any shares. To do so will be at the reader's own risk.