Rubicon boosts buyback after $50M Challenge sale

By Phil Boeyen, ShareChat Business News Editor

Thursday 28th June 2001

Biotech company Rubicon (NZSE: RBC) is increasing the size of its share buyback after the successful sale of its Challenge service station network to oil company Caltex.

The Commerce Commission gave the go-ahead to the acquisition Thursday, although says Caltex will have to divest some properties.

Rubicon CEO Luke Moriarty says the sale is an outstanding outcome for the company.

"This sale, combined with the disposal of the Brisbane fuels terminal for $23 million that was announced earlier this month, will return to Rubicon some $73 million in cash.

"This compares with a total acquisition cost to Rubicon, for both Brisbane and Challenge, of only $20 million - a value gain of $53 million, or 15 cents per Rubicon share."

The company says with the sale of the New Zealand Refining shares, the Brisbane fuels terminal and now Challenge, it has now completely exited its involvement in the fuels sector that it had inherited from the Fletcher Challenge Group restructuring process earlier this year.

Earlier this month Rubicon announced plans for a $40 million share buyback but now says it will increase that to $60 million, with details announced next month.

"As we have already stated, we are very conscious of the discount to net asset backing at which Rubicon is currently trading. Our immediate focus is putting in place value-initiatives to close this gap," says Mr Moriarty.

Following the sale of the Brisbane and Challenge businesses, Rubicon's remaining business portfolio includes a variety of investments in tree bioengineering, cloning and development, and a 17.6% holding in Fletcher Forests.

The company says its net asset backing is around $1.00 a share. Rubicon shares closed Thursday up one cents at 63 cents.

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