Forum Archive Index - November 2000

["Brian Jones" <ibbij@hotmail.com>]

There seem to be a number of issues to consider regarding FFS.
The very short term share price will surely be determined by the success or 
otherwise of the cash issue.Catch 22 really.If the required amount of cash 
comes in from shareholders, I believe the share price will rise.
However if the underwriters are left to pick up a bundle, confidence in the 
company will continue to ebb and the shareprice react accordingly.
I do believe however, that one way or another the cash issue will be 
reasonably successful as the actions and  influence of Fletcher Challenge 
and its connections will make it so.
The other short term influence is CITIC.It is in their interests to put the 
squeeze on FFS at the moment and I imagine the lower the shareprice the 
better.It wouldn't surprise me if their connections were picking up FFS 
shares at around 25cents knowing that when CITIC give the word that a 
resolution may be in sight, the share price will jump.
The merit or otherwise of investing in the cash issue as I see it depends on 
ones tolerance of risk.
Surely the best time to buy commodities is at the bottom of the cycle and I 
gather the log price is pretty close to historical lows right now.
Add to that the current major uncertainty among shareholders about the cash 
issue, talk of the banks moving in on the CNIP if more cash is not 
forthcoming, and the on-going CITIC dispute, and theoretically the market 
price shouldn't be any lower, the discounts having been priced in.
One thing that does worry me though ,is how much the FFS share price is  
being propped up at the moment to ensure the success of the cash issue.Also 
how FFS has been performing in the current financial year.
Once the cash is in, things can change very quickly.Remember Air NZ?

I have bought more FFS at 25 cents and plan to take up the cash issue unless 
the share price drops much below 24 cents on big volumes between now and 
next Friday.
I will do this in an attempt to recover some of my losses, because I can see 
a fairly rapid turn-around if things pan out.If they don't,it is only one 
stock in a broad portfolio and I can afford to wait for an upturn in the 
commodity cycle.( This could of course now be the top of a much lower 
cycle!)

I also believe the FLB share price is being held back at the moment because 
of its exposure to the FFS cash issue and the FLC separation.

As a foot note I must say I don't have much faith in the Fletcher Challenge 
management and the sooner this whole sorry saga is sorted,the better.It 
certainly wont go down in New Zealand's business history as one of our 
better managed Companies.

And finally, all the above excludes the event of downright skullduggery.
- Always a possibility in this country.

Regards and good luck!

P.S. Its ironic that part of the FFS saga is a result of the fact that the 
Government actually sold something at the right time and for the right 
price!
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