Forum Archive Index - September 2001

[Greg <g&jelliott@xtra.co.nz>]

Title: Re: [sharechat] Revisiting : RBC- Rubicon - Asset values - new  FORMULA

Thanks Gerry, very helpful.
Greg E.
> From: "G Stolwyk" <stolwyk@wave.co.nz>
> Reply-To: sharechat@sharechat.co.nz
> Date: Sun, 30 Sep 2001 15:23:31 +1200
> To: "sharechat.co.nz" <sharechat@sharechat.co.nz>
> Subject: [sharechat] Revisiting : RBC- Rubicon - Asset values - new  FORMULA

1. Introduction.

On 24 March 2001, the following formula was derived:

1 RBC share = 1.39 FFS/ FFSPA + Remaining Assets.

( http://www.sharechat.co.nz/archives/2001/03/msg00532.shtml )

After further sales but just prior to the buyback of shares, it was agreed that the NTA of RBC was 100 cents based on the FFS / FFSPA share price of 32 cents.

RBC holds 492 mill. of these ' Forest shares'. RBC itself had about 352 mill. shares.

Therefore, the total value of -or equity in - RBC company was:
492 mill FFS * $ 0.32 + Remaining Assets = $ 352 mill.

The value of the Remaining Assets was $ 194.5 mill. This comprised cash ( including that from recent sales), Research establishments, a research forest in SA, a small investment in GEN and other minor items).

---

2. The Buyback and its ramifications.

It was decided to spent $ 60 mill. on the buyback; this reduced the Remaining Assets to ( 194.5- 60 ) or to $ 134.5 mill. ( We are assuming that these assets did not increase in value since the float ).

At the same time, total net equity decreased by $ 60 mill. to ( 352-60 ) = $ 292 mill. ( Still based on a 32 cents FFS price ).

At the same time the number of shares decreased to a (compromise)  279.5 mill.

( I don't know the exact figure and thought that RBC could have bought up to another 2 mill. shares; however, costs had to be paid as well, offset by some interest. I think that RBC should have issued a proper statement ):

http://www.sharechat.co.nz/archives/current/msg00040.shtml   
  
Thus, the 492 mill FFS * 0.32  + 134.5 mill ( Rem. Assets) =
$ 292 mill., based on 279.5 mill. shares. Therefore:

2.1 The NTA =104.4 cents/ share. ( Based on FFS=32 cents).

2.2 Item: Remaining Assets = 134.5/ 279.5 = 48.1 cents / share. ( This is a constant and does not depend on the FFS price )  

2.3 One RBC share is entitled to 492/ 279.5 = 1.76 FFS share.  

2.4 The new formula will now be:

            
                 
1 RBC = 1.76 FFS + 48.1 cents.



( Check: For FFS =32 cents, RBC= 104.4 cents ).
( Check: For FSS = 26 cents, RBC= 93.9 cents; if sold at a discount of 25%, then RBC price will be 70 cents.)

( If FFS= 35 cents, then RBC'  NTA = 110 cents......If FFS = 40 cents, then RBC'  NTA = 118 cents)

Once we get some new numbers from RBC, then there is a possibility of a minor update.

Gerry