Forum Archive Index - May 2001

["Gary Rountree" <gary.rountree@xtra.co.nz>]

IMO you should vote for the proposal.

Current price of 23c may be way below the asset valuation of 40-70c depending on which valaution methods are used, however one cannot dispute the fact that TTP have been trading up until the proposal around 16c and not paying dividends, in a company that has a perceived tarnished image and in an unfashionable sector.

At the current price of 23c , take the bond which has a face value of 10%, in a climate of falling interest rates that is fairly healthy yield. If the market values the bonds at the face value of 35c - 10% yield (assuming the shareholders accept the proposal) then one could expect an immediate gain around 12c (35c-23c) a gain of 52.2%! 

If the market does not value the bonds in line with current interest rates, then you can take a long term view and "only" take an average gain of 20.4% pa on your fixed interest investment for the next 10 years! (12c/23c = 52.2%/10yrs = 5.2% pa (capital gain)   plus 35c/23c x 10% = 15.2% (interest yield) - you would need to work hard to beat that!

The revenue stream and balance sheet of TTP can handle this proposal without a problem.

The scheme, basically unlocks all the value that exists (like in a number of listed NZSE companies (ala Rubcom,GPG to name but few) and shares the value between ordinary shareholders and SEA. If SEA do alright out of it than good luck to them. To those that argue that the offer is unfair because the property cycle is at a low, then where are they out there buying property. For those long term investors who are sitting on large book losses from years ago , get over the fact that you lost money - what happens going forward is most relevant

 

 

Anyone else got an opinion?

 

 

 

 

Hi

I have just reviewed the information memo from TTP and I am voting against it. I bought some shares thinking that they were under valued. TTP generates good cashflows. Are the bonds for equity swap all that management can come up with? Not good. I don't want to swap my shares for bonds.

SEA Holding, the largest shareholder, must be rubbing their hands together with glee. The NTA of TTP goes from 70 cps to 102 cps after the bonds for shares swap. They are winning an extra 30 cps for doing nothing.

The projected cashflows look odd. Property and administration costs go up by $10M from 2000 to 2001. This is an increase of 50%. What are they intending to do? Go on a spending spree?

I'm not one to whinge without a solution up my sleave. Why not use the $18M in the bank and operating cashflows for 2001 of $30M to buy back the Convertible Capital Notes? This would cost $41M. Then we can all get some dividends and the share price can go back up. Everyone’s happy! Especially me.

Has anyone got some thoughts or ideas about TTP?