Forum Archive Index - July 2002

["Morgy" <morgy40@xtra.co.nz>]

Mike
Yes I was aware of the takeover offer provisons inregard to this offer,
however he has tried to grab it in the past for next to nothing and as you
suggest he will do so again if the opportunity is right. Going out on a limb
here as this is from memory, I understand that PRG does not pay dividends
and I had heard it suggested in the media that this is to drive out income
based investors. Your thoughts on this would be appreciated as my comment
should be considered idle gossip.

I did myself read an open briefing with their CEO and from what he was
saying PRG is a goldmine and will continue to develop even more excess cash
in the future, They have just raised heaps of money and branched into
personal loans using the PRG database which is huge, I personally recieved
an offer from them having been a previous customer. The personal finance
market has taken off since the banks got out of it several years ago and a
plethora of finance companies have been established in the last 3 years. The
interest rates can be phenominal. PRG have seen this develop and with there
inhouse database have simply moved across to personal lending with
established clients. In my opinion this is where they will grow the most, I
dont know if Noel Lemming actually make any money but it is after all just a
method for creating finance margins on loans based around products, with the
personal finance company they loose the overhead of having a store.
The reality is that if you buy a stereo for say $1500.00 over 3 years and
you dont pay say 15 months down the track, what is that stereo worth to them
once they pick it up, why bother with the stereo just give the folks the
money and if they dont pay put them to Bay Collection and that stuffs there
credit rating. You would be surprised at how low the default rate is. A
company that I have personal knowledge of has built a finance book in a
provincial city  from scratch with one person for the first year and now 3
in total of 1.2 million dollars in a little over 2 .5 years at interest
rates around 19 % and a default rate of less than 3 %,  there application or
book fee is worth $200,000.00 per annum and pays for all local costs
seperate to the interest money coming in.
In addition all clients take insurance and they get a kick back on that,
another amazing cashflow. Loans are now marketed the same as product
purchases, i.e from 25.00 per week you can buy $5000.00 off us etc etc.

Long waffle about personal finance but my point is that dont worry about
living and giving, keep an eye on the personal loan side of things as this
is the growth and the cashflow is huge.

Dont ask me why he got into knickers other than the obvious reason luvely
jubbly

More thoughts on PRG would be appreciated. Anybody have all the stats on
them.

Regards

Morgy





----- Original Message -----
From: "Mike Hudson" <mikehudson@clear.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Saturday, July 20, 2002 3:43 PM
Subject: [sharechat] PRG - Eric Watson


> Morgy wrote
>
>  > What about Eric Watson always trying to pinch PRG off the minority
> > shareholders for next to nothing , anyone got an opinion about this."
>
> Eric wasn't serious about this offer. Because he had increased his
holdings
> by 3.77% after to what amounted to a swap of Watson's ADV holdings with
Nick
> Gordon's in PRG he was obliged under the Takeover Code to extend the offer
> to the other minority holders of PRG. There was never any intention of
> actually increasing his stake.
>
> However he won't go away and if he sees the opportunity to grab the rest
of
> the company at a cheap price I am sure he will take it. My pick is that
> given the stated intention to turn PRG into an investment vehicle there
will
> be large rights issue to fund said investments. The issue will be at a
high
> enough price to turn off many of the smaller shareholders resulting in the
> underwriter picking up a sizeable chunk. The underwriter of course will be
> Cullen Investments.
>
> I started building a position in PRG in November last year at about $1.95
> but stopped about halfway to my target when the takeover for Bendon took
> place: I wanted to be in whiteware, appliances and consumer credit not
> women's knickers - a mistake as it happened because the shares have
> appreciated another dollar since then. But I still don't like to see a
> company moving so far away form its core competences
>
> Another concern is the Living and Giving chain which is obviously not
> performing up to expectations: I have visited several of their stores and
> have not been impressed, stocked with the same overpriced crockery and
> giftware as myriads of competitors. Other shoppers seem to have the same
> opinion given the paucity of potential customers actually in the stores.
It
> will be interesting to see if we get any segmented information in the
annual
> report which is due out soon.
>
> On the other hand PRG still looks underpriced compared to WHS and BGR and
I
> am going to hang in for the time being but somewhat nervously.
>
> Any other thoughts
>
> Cheers
>
> Mike H
>
>
>
>
>
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