Forum Archive Index - July 2002

[Mike Hudson <mikehudson@clear.net.nz>]

Morgy wrote

 > What about Eric Watson always trying to pinch PRG off the minority
> shareholders for next to nothing , anyone got an opinion about this."

Eric wasn't serious about this offer. Because he had increased his holdings
by 3.77% after to what amounted to a swap of Watson's ADV holdings with Nick
Gordon's in PRG he was obliged under the Takeover Code to extend the offer
to the other minority holders of PRG. There was never any intention of
actually increasing his stake.

However he won't go away and if he sees the opportunity to grab the rest of
the company at a cheap price I am sure he will take it. My pick is that
given the stated intention to turn PRG into an investment vehicle there will
be large rights issue to fund said investments. The issue will be at a high
enough price to turn off many of the smaller shareholders resulting in the
underwriter picking up a sizeable chunk. The underwriter of course will be
Cullen Investments.

I started building a position in PRG in November last year at about $1.95
but stopped about halfway to my target when the takeover for Bendon took
place: I wanted to be in whiteware, appliances and consumer credit not
women's knickers - a mistake as it happened because the shares have
appreciated another dollar since then. But I still don't like to see a
company moving so far away form its core competences

Another concern is the Living and Giving chain which is obviously not
performing up to expectations: I have visited several of their stores and
have not been impressed, stocked with the same overpriced crockery and
giftware as myriads of competitors. Other shoppers seem to have the same
opinion given the paucity of potential customers actually in the stores. It
will be interesting to see if we get any segmented information in the annual
report which is due out soon.

On the other hand PRG still looks underpriced compared to WHS and BGR and I
am going to hang in for the time being but somewhat nervously.

Any other thoughts

Cheers

Mike H





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