Forum Archive Index - February 2002

["Chris Castle" <c.castle@paradise.net.nz>]

Hi Snoopy,

Answers/comments in caps below.

----- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Tuesday, February 19, 2002 6:27 AM
Subject: Re: [sharechat] The Kirk's Recapitalisation


> Hi Chris,
>
> Thanks for the enlightening reply.  I didn't consciously remember
> reading your column on the subject in December, but after reading the
> excerpt I am now sure that I did.
> >
> >
> >Since then I've become aware that the new strategy, which I agree
> >completely changes the risk profile of the company, is probably
> >being driven by the new CEO. The expansion itself makes sense, the
> >existing premises are not ideal - there simply isn't enough room and
> >there isn't even air conditioning. An air bridge is logical, as is
> >gradually taking over space in the Harbour City Centre as it comes
> >free. Whether they had to buy the property themselves to achieve
> >this expansion is another issue altogether.
> >
> >
> It sounds like the Kirks building itself is in need of a good refit.

THE BUILDING, NOW OWNED BY CAPITAL PROPERTIES (EX SHORTLAND) , HAS BEEN
COMPLETELY REBUILT QUITE RECENTLY AND HAS AN OFFICE TOWER IN IT (LIKE THE
CLARENDEN HOTEL IN CHCH). AIR CONDITIONING WASN'T INSTALLED AT THAT TIME -
POSSIBLY AS A COST SAVING MEASURE.

> I wonder how it stacks up against current earthquake engineering
> standards?  Perhaps the capital requirements that Kirk's have are
> greater than they are letting on?  It is unthinkable that Kirks
> would ever move from it's site.  But then again, if the building next
> door was an option?  I THINK THEY REALLY DO NEED BOTH. Perhaps they will
tout that as a possibility
> when they renegotiate the rent agreement for that Kirk's site?  I
> wonder when the next rent renegotiation is due?
I BELIEVE IT IS IMMINENT

Could the purchase
> of the old DIC building be some giant bargaining chip in a game of
> rent poker? NO - THE CAPITAL PROPERTIES PEOPLE WOULD BE AWARE OF THE KIRKS
SPACE PROBLEMS - LITTLE CHANCE OF BLUFFING ON THIS ONE.
> >
> >
> >I think investors are bailing primarily due to the rights issue -
> >not because of the change of direction - many are Wellingtonians
> >fiercely loyal to the company and they will be selling only because
> >they can't afford to take up the rights. Interestingly, Kirks
> >director Murray Doyle, one of the most astute and well connected
> >investors around is an underwriter of the issue.
> >
> >
> I can't quite remember how Kirks got onto the main board. SPUN OFF BY
HELLABY - IT WAS PART OF RENOUF CORPORATION - IT WAS LISTED INITIALLY ON THE
SECOND BOARD (USM) BY HELLABY

My memory  > says they were unlisted for a while, before gaining their
sharemarket
> listing, but I can't remember where all the original shareholders
> came from.  My other memory says they were resurrected from some
> shell company that almost collapsed in the late 1980s.   Such
> memories if corrected would be useful in trying to assess the risk
> profile of the shareholders that are there now.

HELLABY WAS RESURRECTED BUT THESE PEOPLE ARE NOT DIRECTLY HELLABY (EX
RENOUF) SHAREHOLDERS  - MORE LIKELY BLUE BLOODED AND AGING WELLINGTONIANS
WHO HAVE SHOPPED THERE FOR YONKS - THEY WERE CUSTOMERS FIRST & SHAREHOLDERS
NEXT.
>
> Of course, the contrary view of 'loyal shareholder' is someone
> lacking the analytical skills to realise what is happening until it
> is too late!   And that Murray Doyle is only underwriting the rights
> issue himself because he couldn't get anyone 'outside' to do it.

DOYLE (A DIRECTOR OF MICHAEL HILL, BOTRY - ZEN, SOUTHERN CAPITAL & POSSIBLY
OTHER STOCKS AND ALSO A CLOSE BUSINESS ASSOCIATE OF HOWARD PATTERSON) IS NOT
THAT SORT OF DIRECTOR/INVESTOR. HE'S STILL QUITE YOUNG DESPITE HAVING
ESTABLISHED AND SOLD SEVERAL SHAREBROKING FIRMS. HE WON'T BE A KIRKS
UNDERWRITER FOR SENTIMENTAL REASONS. HE'S NOT HIGH PROFILE BUT IS AN
ACCOMPLISHED DEAL MAKER OF UNDISCLOSED BUT I WOULD GUESS SUBSTANTIAL MEANS.



It
> is good to see people backing their own horse with their own money
> like this but at the same time such people can have distorted views
> of their own abilities.   That probably sounds extra cynical, but I
> know that retailing can be a tough game.
> >
> >
> >For these reasons I'd see the current weakness in the price as an
> >opportunity rather than a problem.
> >
> >
> I have to admit to having a soft spot for Kirks myself.  You
> have to respect a business that has been around since 1863.  Then
> again I thought the same of 'the Southerner', and we lost that after
> 124 years of servicing the Christchurch to Invercargill rail route
> last week.   But I'll be keeping an eye on Kirks I think.

GOOD CALL.

Regards,

Chris

> SNOOPY
>
> disclosure:  do not hold shares in KRK
>
>
>
> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
> "Dogs have big tongues, so you can bet they don't
> bite them by accident"
>
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