Forum Archive Index - August 2001

[Ben Malthus <BDM39@student.canterbury.ac.nz>]

1) 80/100 = 80%

2) 352-74 = 278M shares left
   Total assets left = $352M - (74M*$0.8)
                     = $292.8M
   New NTA = 292.8/278
           = %1.053
3) New price = 105.3*0.8
             = $0.8425


>===== Original Message From sharechat@sharechat.co.nz =====
>Readers,
>
>Before the buyback, RBC had about 352 mill. shares.They were selling @ 80 
cents a share. Accept that RBC had an asset backing of 100 cents per share.
>
>-----------------------------------------------------------------------------
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>
>Accept that RBC will buyback 74 mill. shares @ 80 cents per share.
>( We did'nt get the data from Friday, but it seems that RBC has sofar bought 
some 20 mill. shares @ about 80 cents; we assume that the remaining 54 mill. 
shares will also be bought at the same price ).
>
>-----------------------------------------------------------------------------
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>
>Questions:
>1. What was the discount RBC was selling at before the buyback ( % )?
>
>2. What is the net asset backing per RBC share immediately after the buyback 
is completed?
>
>3. Applying the calculated discount from item 1 on your answer from item 2, 
what ought to be the new price of an RBC share immediately after the buyback?
>
>Assumptions: The price of RBC does not change during the buyback and hence 
the 74 mill. shares will be bought @ 80 cents.
>The present status quo is maintained, eg. no corporate developments of any 
kind and the FFS price is stable.
>Any interest on cash being held prior to investing is ignored. ( To be spent 
as part of the brokerage ).
>
>Care to give it a try?
>
>Gerry

Ben Malthus
bdm39@student.canterbury.ac.nz


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