----- Original Message -----
Sent: Friday, April 06, 2001 1:12
AM
Subject: Re: [sharechat] FFS and
RBC
Hi John,
My suggestion is that for those who believe
that there is a future in FFS shares, the best option is sell them all
now and convert the proceed into RBC shares NOW!. The simple calculation below
show why:-
In a nutshell, RBC is a company full of
assets and hardly any liability. At the onset of the FCL separation, they were
inherited with cash and assets:
1) Their cash came from $34M
from the sale of NZ Refining Company share holding and $183M from the sale a
portion of their Capstone shareholding.
2) They still own some
capstone shares valued at $75M (based on US$28/share @US0.445 conversion
rate)
which cannot be sold until Sept
2001.
As part of the seperation arrangement, RBC is
converting 1 and 2 above into:
A) Buying Challenge Stations &
associated assets from Shell for $20M.
B) RBC will pay or have paid FFS $80M for South
American forestry and biotech intellectual property
C) RBC paid $0.25/share for 267M of FFPS
shares, ie $67M (you noticed last week there was bleep in the share price
!!!)
D) RBC will have to buy from FCL Forest 225M of
(75M FFS & 150M FFPS) shares at $0.40/share a total of $90M. (This
transaction is yet to be reported in the future. So don't get excited if
suddenly in a single day the price goes up to $0.4 on the market; you would
know why then)
RBC will own a total of 267+225= 492M FFS/FFPS
shares at a total price of 67+90=$157M, therefore an average price of
(67+90)/492 ie approx. $0.32 per share.
RBC has a total of 353.2M shares on issue. At
today's market price of $0.43/share, RBC is only valued at
353.2*0.43=$151.8M
For every cent rise in FFS/FFPS share, it would
add 492/353.2=1.39 cents to RBC share. Conversely, for every cent fall in
FFS/FFPS share, it should reduce RBC share by 1.39 cents.
As at today's price, RBC is valued at ($151.8M)
less than the total value of the FFS/FFPS shares currently owned by RBC!!!,
notwithstanding the fact they own another $100M of assets from A and B
above.
With all these figures, it should provoke
two interesting school of thoughts:-
i) Either RBC is currently grossly
undervalued by the market, even though if one assumes that the current share
price of FFS/FFPS being fair value, and because there must be some
"residue" value from assets A & B above. (Perhaps, that's why AMP is
buying RBC for the free asset of A & B above)
ii) Or, RBC current price is fair
value, the share price of FFS/FFPS will have to drop in the short term at
least, to reflect certain "residue" value of assets of A & B above. For
example, if assets of A & B is discounted by say 50% to $50M, at current
RBC share price, it would value the combined FFS/PPFS share price of
($151.8-$50)/492=$0.207!!!!
IMHO, the current share price of FFS/FFPS does not stack up at all.
As stated above, RBC is paying an average price of $0.32 for the
combined 492M FFS/FFPS shares. Strangely enough, this price
"coincided" with the share price of FFS/PPFS the day after the right issue, as
opposed to $0.25 prior to the right issue. This tend to support the
argument that FFS/FFPS share price was "artificially" jacked up so that
RBC is seen to be paying the right price for their holdings. It would be
interesting to see where FFS/FFPS share price would head, post
transaction on event D above.
For my money, RBC would be a better horse to bet on !!!!
Disclaimer: The above is a personal opinion and is provided as a food for
thought, agree or disagree at your own responsibility!!!
----- Original Message -----
Sent: Thursday, April 05, 2001 4:26
PM
Subject: [sharechat] FFS and RBC
I read Gerry's message the other day how RBC
would be a better buy than FFS with RBC worth about 1.4 to 1 FFS share. How
would it work if you already had a heap of FFS shares? Would it be better to
buy more FFS to reduce the headsum or.. buy RBC and hope to dilute the
FFS loss that way? I bought a few RBC the other day but unfortunately I
bought at the very top. I guess either way I would be buying to dilute both
head sums at the moment. Any ideas? I own far more FFS than I do
RBC
Thanks..John
See IRG research reports
