Forum Archive Index - July 2001

["Jeffrey Kelly" <jrjkelly@ihug.co.nz>]

Gerry

 

  Further to our theorising of Rubicons possible future value it is interesting to speculate on different outcomes regarding the FFS/Cnifp situation.

 

As you have eluded to it is probably in the long term Rubicon shareholders interest if the buyback is well under way or even completed before the Cnifp sale is finalised as this would keep the share price at around current levels and the more shares that they can buy for $60million the better the outcome.

 

Another benefit of the above scenario is that the 1cps rise in FFS/PA = 1.39cps rise in Rubicons nta that you calculated in your post  of March 24, would become a 1cps rise in FFS/PA = 1.82cps rise in RBC's nta because of the reduced number of shares on issue.( from 352m to approx 270m )

 

 

On the other side of the coin is the effects that the completion of the Cnifp sale would have if it went through before the buyback had progressed  very far.

Assuming any Cnifp settlement resulted in a re-rating of the FFS/PA share price and flowed on to RBC's price then the number of shares you could purchase for $60 million would dramatically reduce lessening the benefits to the long term holder.

 

Another factor is that as a 1cps rise in FFS/PA represents a 3.3%increase (on 30cps ) in value whereas the corresponding 1.39cps rise in RBC only represents a 1.8% increase ( on 77cps ) so you may get traders selling RBC into the buyout and buying back into FFS/PA for the better return.

The effects of this would be difficult to predict.

 

On a negative note the FFS/PA price may not recover from it's current perceived low which would produce different outcomes altogether.

 

Obviously the directors of Rubicon can see some upside as they have clearly stated.

 

Still some interesting times ahead for these two stocks

 

Jeff