Forum Archive Index - August 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Jim and Winner69,

In answer to your 'why bother' question, when the market is on the 
way down or skewing sideways often it is those companies that have no 
real expectation built into the share price that are the places to 
invest.  If a company is hyped up on growth expectations, then pop 
goes the expectation and down goes the share price.  Is anyone 
bullish about BIL?  Not that I've heard, so no expectations to pop.

All the historical points raised by Jim and Winner have some truth in 
them but I must ask, are they still valid?   Paul Collins hasn't been 
part of the company for years now.  The share price of the company is 
29.5c on a preconsolidation basis, but so what?  You have to look 
forwards not backwards.  Jim, you think the NTA of Brierley shares is 
only 55-60 cents?  I get $1.28, a fairly large difference,  (see my 
BIL equation post).  I'm not saying I'm certainly right, but I'd be 
pleased in you could point out the mistake in my calculation.

Why invest in BIL rather than GPG?   From my point of view the 
discount to asset backing for BIL is around 50%, vs what (30%?) for 
GPG.  In other words BIL *today* is better value.


>
>
>Jim wrote:
>
>Those still looking at the stock are better off getting 
>a few broker reports to read rather than attempt to make sense
> of BIL's financials (NTA is around 55 cents to 60 cents)
> or buying Thistle or Air NZ directly.
>
>


Are you, Tim,  accusing the brokers of not making sense of the 
financials?  Why would you bother with a broker report that makes no 
attempt to look at the accounts?   As for buying into Air New Zealand 
directly, if ever there was a share that is way over-priced it must 
be that.

The idea of buying into Thistle directly and quitting BIL is not so 
silly.  I might look into that in another post.

You are wrong about Camerlin paying a dividend BTW.  BIL paid a 
dividend of 3cps on 30th January 2000 with Camerlin firmly in 
control.  That was a yield of 7.5% on teh share price of the day.  It 
made BIL quite a good income share to own at the time (which is why I 
had it Winner69), without the benefit of foresight of what was to 
come!  Actually I have to admit I didn't really understand BIL as 
well as I do now at the time.

I do have some concern about Camerlin not being interested in 
minority shareholders.  But I take heart from the fine print of 
section 23 in the annual report 2001, where it states that all 
options granted to Selwyn Cushing had lapsed and expired 
worthless.   There was more joy welling up in my heart when I read 
that all of Greg Terry's options had been cancelled as well, and 
replaced with a new series of options that could only be exercised 
starting when the BRY share price got to $SGP1.10.   Following the 
sacking of Terry, he won't be getting any of those either - 
marvellous stuff!

I am no longer of the view that the BIL debt is the uncontrollable 
nightmare that it was.   BRY can sell down their holding in Fraser 
and Neave over the next 3 years, and flick off the Air New Zealand 
stake to some plonking index fund manager.  That would raise around 
30c per share.  We'll be conservative and say that only about half 
this will be available for debt repayment, as 5c per year will be 
needed to meet an operating shortfall every year for the next 3 
years.  The debt due to be repayed in the next 3 years is around 17c 
per share.  Given that I haven't allowed for any dividends to be paid 
from Fraser and Neave over this 3 year timeframe,  I think BIL have 
got their debt covered.  By then it will be FY2007, and BIL will have 
access to the full Bass Strait Royalty again, the 'hidden jewel' that 
is hiding away off the balance sheet.  If they sold the rights to 
this again, as they did in 1997, this will effectively clear the 
remaining debt.   If this scenario comes to pass, by 2007 they will 
have become a holding company for Thistle Hotels and the Molokai 
Ranch, and have no term debt. 


>
>
>Suppose the next big hurdles are when a large number of
>capital notes are due for repayment over the next couple
>of years. Obviously some concerns out there when you can
>get BIL 9.25% notes on the market at 15-20% yield.
>
>

The yield has been like that for 6 months or so now and the BIL debt 
position has improved considerably.  If I were a fixed interest 
investor, I might seriously consider picking up some of those notes 
at a 15% plus yield!


>
>Shame that so many old BIL shareholders are still holding
>waiting for the glory days..........
>


The day the share price gets to $4, the equivalent of the $2 
pre-consolidated share price that certain BIL executives who shall 
not be named said it was worth, I'll be buying my ticket to the moon. 
  
I'm not waiting for a return to the glory days. Just pointing out a 
possible opportunity here to play about with an odd box of assets 
that everyone else thinks is a dog.   When the clouds of gloom 
hang over a prospective investment and everybody else has lost 
interest, isn't that about the time that someone like Warren Buffet 
gets interested?   Perhaps it is time to adjourn to the focus 
investment group... 

SNOOPY















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e-mail  tennyson@caverock.net.nz
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"Stay on the upside of the downside, 
Anticipate the anticipation!"



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