Forum Archive Index - May 2002

[nickk@quicksilver.net.nz]

Matt

As opposed to being an 'immature student'?

Well done.

Nk

Matthew Van Veen writes:

> Snoopy
> 
> I have decided to reeducate myself and am currently a "mature student" doing 
> a DIP BUS at AUT. One of my papers is Business Finance and a question in my 
> current assignments is "Describe and explain the factors that caused Air New 
> Zealands financial crisis in 2001".
> Its due in next week. I put info together from the AIR website, treasury, 
> news clippings and sharechat archives. I will use the Chart that Phaedrus 
> kindly produced for me as an attachment with a basic explanation that you 
> have highlighted. The other recent rights issues were in Oct 96 and Oct 
> 2000. Note though the price was long trending down prior since 1999 prior to 
> the purchase of the 2nd 50%. I still however can't measurably pin the blame 
> on one thing as there were various factors all beginning with the Aust Govt 
> and of perhaps the conflict of interest on the Air NZ board?
> 
> I think the story of Air NZ will be a case study for all NZ business 
> students for years to come as like ENRON possibly will be in US.
> 
> Feel free to offer more opinions - all will be a help. The question only has 
> a 1500 word limit.
> 
> Matt
> >From: "tennyson@caverock.net.nz" <tennyson@caverock.net.nz>
> >Reply-To: sharechat@sharechat.co.nz
> >To: sharechat@sharechat.co.nz
> >Subject: Re: [sharechat] Air NZ Chart
> >Date: Wed, 15 May 2002 19:33:22 +0000
> >
> >Hi Matt,
> >
> >It was interesting to see the Air New Zealand share price chart again
> >and we can thank Phaedrus for it.
> >
> >However, what do you intend to do with this chart?   I would suggest
> >that considering any of those share price figure plot points before
> >the capital reconstruction became inevitable late last year is not
> >wise.
> >
> >Now, I know that Phaedrus would say that the chart is only an
> >approximation, as it doesn't allow for dividends cash issues and
> >whatever else.   However, I would go much further than that.  So much
> >capital was introduced into Air New Zealand during the
> >government reconstruction that if you attempt to use the chart as
> >presented, not only is it inaccurate, it is *dangerously misleading*.
> >
> >Immediately before and immediately after the capital reconstruction
> >the underlying business did not change instantly.  However, instead
> >of the AIR shares listed on the stock exchange representing the
> >whole company, those same shares were only representing 18% of the
> >business.  To account for this, you have to scale down the figures
> >before this reconstruction time period accordingly.  What you must do
> >is take the closing share price before the reconstruction and scale
> >them by 18/100 or 0.18.   Take an example:  The share price closed at
> >$1.58 at the end of year 2000.   However, on your graph you will need
> >to use the figure $1.58 x 0.18 = 28c.   Only by doing this will you
> >be able to glean anything meaningful from this chart.
> >
> >SNOOPY
> >
> >
> >
> >---------------------------------
> >Message sent by Snoopy
> >e-mail  tennyson@caverock.net.nz
> >on Pegasus Mail version 2.55
> >----------------------------------
> >"You can tell me I'm wrong twice,
> >but that still only makes me wrong once."
> >
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> 
> 
> 
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