Forum Archive Index - October 2002

["Richard Hooper" <hoop@ihug.co.nz>]

Hi Greg
Interesting post.

As you see below,this is where most of my interest is focused at the moment.
Disc:-  Own CAH,RBC,GPG

My thoughts originally (a year ago) was,cyclic stocks have brief large
upturns swings, so I wanted to in early. ( I am a long term investor). With
the upswing,  I assumed CAH would be get the most, FFS taken over as it is
weak, RBC benefits with the takeover, and before the dust settles
International Paper tries for full takeover of CAH,as its coffers would be
replenished with the upswing of the paper/wood cycle. In the end I assumed
it would be 2 giant overseas companies, controlling 90% of the NZ forestry
market with little niche markets NZ companies making up the rest............
I bought GPG for other reasons. With GPG entering this market it has
reinforced my beliefs that this market has a huge potential to make good
capital gain for a patient investor ( as long as one isn't pariotic).

Since then alot of sub-plots are happening ,but my assumption of the end
result has not changed.

See "Guinness Peat Group  due diligence on CNIFP" thread on the other
channel.
Especially interesting is Belgarion thoughts and assumptions, that is
similar to mine.

My thoughts are:-.. GPG arrived onto the scene late, stuffed up previous
CNIFP sale because they want it and cheap........ GPG buys CNIFP and
incorporates it with newly formed GPG forests......... Buying CNIFP needs
someone to run it, FFS  has the resources but not the management that GPG
likes...so GPG gets controlling interest in FFS through the backdoor via RBC
. RBC will be asset stripped for a tidy profit which will help to pay off
expenses occurred  with GPG entry. This so far is predictable....what
happens now??.....GPG is not a natural forestry company so at some point it
will exit.......The Commerce Commission will not allow a single forestry
giant.... but will it allow 2 giants in the marketplace????? ..maybe.....who
will they be.....I think CAH or International Paper would be one..the
other??? maybe another overseas giant????? or  GPG Forests until it too is
bought out.
I don't think  CAH will be in this mix, due to monopoly laws, unless there
is a GPG grand plan to buy out CAH shares from IP using GPG forests as a
swap type transaction...but this seems a silly way of going about things, if
all the long it was CAH they were after...See below for another reason why
not......
.....Maybe,a better scenareo is that GPG forests incorporates FFS and then
GPG exits via public share float of GPG forests when the forestry commodity
prices upswing.

In trying to analyse Sir Ron Brierley thinking and the way he acts, the one
thing he does predictably, is he tend to revisit old stamping grounds ( he
runs on a common thread)...........................So where the connection
between RBC, FFS, GPG one might ask??.......One connection is Hugh Fletcher.
Both He and Sir Ron were involved together in DB breweries back in the early
1980's.....coincidence ??????
Cheers
Hoop


----- Original Message -----
From: "Maria Smith" <smith@ps.gen.nz>
To: <sharechat@sharechat.co.nz>
Sent: Saturday, October 05, 2002 6:06 PM
Subject: [sharechat] GPG FFS RUB CAH


> From what I have been able to read over the last week or two our forestry
> companies are going to have a very different ownership structure in say 6
> months from now.
>
> The way I see the situation is as follows
>
> 1. GPG have made a partial takeover offer for a majority shareholding in
RUB
> at 75c against a current market price of 72c. This is doomed to failure as
> most holders would prefer to hold onto their shares so that they can
benefit
> from any restructuring GPG make.The GPG directors are astute so is this a
> smokescreen for a bigger prise.
>
> 2.  Talks have been held with the recievers of the CNIP. You dont hold
these
> talks unless you have an overall plan. GPG cannot afford to purchase the
> forest on its own (they wouldnt want to even if they could afford it)
>
> 3.  CAH have been mentioned in the papers as part of the rationalising of
> the forests.
>
> 4.  The shareholding of FFS &  RUB was widespread before GPG obtained
their
> 20% until it was discovered that Perry also had a large shareholding in
RUB.
> Has this upset the applecart in view of the acrimonious court proceedings
> and GPG having frozen Perrys ability to dispose of their shares.
>
> 5.  The share price of FFS & CAH has been meandering downwards indicating
> that no one including GPG is building a stake. Does this mean that my
> ramblings above are just ramblings.
>
> 6.  For CAH to be involved this would require the approval of its majority
> shareholder International Paper.
>
> 7.  If I was the driving force behind these discussions what would be my
> objectives.
>
> Conclusions.
>
> 1.  I would want to make the maximum amount of money for the least input
and
> the least risk.
>
> 2.  I would need to obtain control of all of the companies. A shareholding
> of 30-35% of RUB would give me control of both RUB and FFS.
>
> 3.  I would need to enter into an understanding with International Paper
to
> purchase their shareholding to give me control of CAH.
>
> 4.  With the above organised I would be able to orchestrate a merger
between
> the three forestry companies to create a huge monopoly which would
purchase
> the CNIP.(After allowing for a few concessions to the Commerce Commission)
>
> 5.  After the above has been achieved I would need to make my money
because
> at this stage I havent got anything for my effort.
>
> 6.  I would need to find someone willing to buy my huge shareholding in
the
> merged giant at a suitably huge premium so I can double my money.
>
> 7.  I wonder if some there is an organisation which might be interested in
> such a shareholding.  Perhaps a foreign goverment agency might be
interested
> in a second attempt.
>
> 8.  Maybe I am still just rambling.
>
> Greg
>
>
>
>
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