On 24 March 2001, the following formula was
1 RBC share = 1.39 FFS/ FFSPA + Remaining
After further sales but just prior to the buyback
of shares, it was agreed that the NTA of RBC
was 100 cents based on the FFS /
FFSPA share price of 32 cents.
RBC holds 492 mill. of these ' Forest
shares'. RBC itself had about 352 mill.
Therefore, the total value of -or equity in
- RBC company was:
492 mill FFS * $
0.32 + Remaining
Assets = $ 352 mill.
The value of the Remaining
Assets was $ 194.5 mill.
This comprised cash ( including that from recent sales), Research
establishments, a research forest in SA, a small investment in GEN and other
2. The Buyback and its
It was decided to spent $ 60 mill.
on the buyback; this reduced the Remaining Assets to ( 194.5- 60 ) or to
$ 134.5 mill. ( We are assuming that
these assets did not increase in value since the float ).
At the same time, total
net equity decreased by $ 60 mill. to ( 352-60 )
= $ 292 mill. ( Still based on a 32
cents FFS price ).
At the same time the number of
shares decreased to a (compromise) 279.5 mill.
( I don't know the exact figure and thought that
RBC could have bought up to another 2 mill. shares; however, costs had to be
paid as well, offset by some interest. I think that RBC should have issued
a proper statement ):
Thus, the 492 mill FFS * 0.32 + 134.5 mill ( Rem. Assets)
$ 292 mill., based on 279.5 mill. shares. Therefore:
2.1 The NTA
=104.4 cents/ share. ( Based on FFS=32
2.2 Item: Remaining
Assets = 134.5/ 279.5 = 48.1 cents / share. ( This is a
constant and does not depend on the FFS
2.3 One RBC share is entitled to 492/
279.5 = 1.76 FFS share.
2.4 The new
formula will now be:
1 RBC = 1.76 FFS
+ 48.1 cents.
( Check: For FFS =32 cents, RBC= 104.4
( Check: For FSS = 26 cents, RBC= 93.9
cents; if sold at a discount of 25%, then RBC price will be 70
( If FFS= 35 cents, then RBC' NTA = 110 cents......If FFS
= 40 cents, then RBC' NTA = 118 cents)
Once we get some new numbers from RBC,
then there is a possibility of a minor update.