Forum Archive Index - August 2001

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

Readers,

 

Before the buyback, RBC had about 352 mill. shares.They were selling @ 80 cents a share. Accept that RBC had an asset backing of 100 cents per share.

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Accept that RBC will buyback 74 mill. shares @ 80 cents per share.

( We did'nt get the data from Friday, but it seems that RBC has sofar bought some 20 mill. shares @ about 80 cents; we assume that the remaining 54 mill. shares will also be bought at the same price ).

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Questions:

1. What was the discount RBC was selling at before the buyback ( % )?

 

2. What is the net asset backing per RBC share immediately after the buyback is completed?

 

3. Applying the calculated discount from item 1 on your answer from item 2, what ought to be the new price of an RBC share immediately after the buyback?  

 

Assumptions: The price of RBC does not change during the buyback and hence the 74 mill. shares will be bought @ 80 cents.

The present status quo is maintained, eg. no corporate developments of any kind and the FFS price is stable.

Any interest on cash being held prior to investing is ignored. ( To be spent as part of the brokerage ).

 

Care to give it a try?

 

Gerry