Forum Archive Index - May 2001

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

 

 

Gary,

 

Re your last sentence " 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"

 

Yes, I can understand that; it is perfectly natural to think so. That deserves sympathetic comment.

 

What is worrying  me and the institutions is that :

 

1. Given time, the net asset backing could be artificially devalued or the cash being used to buy property at very high prices.

 

I don't want to get into details as where a future management would buy property from.  

 

2. The note holder will have a difficult job monitoring management, eg. director's salaries or money being spent on " other items ". 

 

It will be difficult to trace the nature of these items. Even some present shareholders complain that they have problems here. 

 

There is a future possibility that as a consequense of " losses", the full interest payments on these notes, will decline. That should assist any future management in buying these back at low prices; in time, the rest will be taken over.  

---

The safety of the investment is primary. Obviously, there are always risks. However, in this case, there could be other than any normal risks.  

 

If you think that it is not safe, then there is no need to comment on any calculations, eg. interest rates yields, V or U shaped recoveries or whatever.

 

I think that, given time, it may not be safe. 

 

Gerry

Does not hold TPP.