Sharechat Logo

Forum Archive Index - April 2003

Please note usage of the Forum is subject to the Terms & Conditions.

Messages by Date [ Next by Date Previous by Date ]
Messages by Thread [ Next by Thread Previous by Thread ]
Post to the Forum [ New message Reply to this message ]
Printable version

Re: [sharechat] GPG notes

From: "Richard Hooper" <>
Date: Mon, 21 Apr 2003 23:40:42 +1200 (New Zealand Standard Time)

Hi  Chatters
There seems to be some new chatters to sharechat. Snoopy is a long standing chatter and is writings are of those of experience and well founded fact, experience and wisdom.
I am a long term investor and an intermittent contributor to Sharechat over the last 3 years ..I think..??
 I seldom get my thoughts across accurately as my writings are not clear due to my inability to communicate precisely in writing.
. I didn't sell GPG during the NZ$ appreciation. My portfolio( Medium Investor (Value) in shares) has shrunk from 12 to 3 ( GPG is one) and I am still 10% up (capital value) this year. This is a defense strategy I use when times look bad. I keep the stocks that I seem to fall the least.
I have roughly 1/3 in each company invested.
GPG in my thinking is a growth stock.... and should grow fast ( in NZ$value) because  the NZ$ has peaked or will not appreciate much more ( crystal ball theory). The depreciation of NZ$ could be slow  however ????? but in any case GPG looks a good investment.
Sir Ron does not believe in dividends because it is an inefficient way of giving shareholders rewards. There are other methods that  are better to which he is using.
Disclose  Have shares in GPG, CAH (bought at $1.60 way back) ,DPC  ....and nothing else!!!!!! at present.
Disclosure  2 ..I am looking to buy as my defense measures could be eased shortly.( sticking one's head up out of the hole ).
-------Original Message-------
Date: Monday, 21 April 2003 21:55:37
Subject: Re: [sharechat] GPG notes
Hi Daryl,

>As announced by the Chairman on 14 March 2003 in his statement
> accompanying the preliminary results for the year ended 31 >December 2002, Guinness Peat Group plc ("GPG") intends to make >an off market tender offer to repurchase up to 10 per cent. of each >shareholder's ordinary shares on the basis of five 8% convertible >subordinated unsecured loan notes
of 20 pence each to be issued by >GPG (UK) Holdings plc ("GPGUK"), (the"Further CLNs") for every two >ordinary shares bought back (the "Buyback Offer"). The Further >CLNs will rank pari passu, and will be fully fungible, with the existing >CLNs of GPGUK with their principal repayable in two
equal annual >instalments with the option to convert back to ordinary shares in the >capital of GPG on 30 June 2004 and 2005.
>Can someone explain what the following means to a small
>like me? Are they basically Giving me 5 notes at 20p each and
>8% on them in return for 2 of my shares.

Yes. Provided, that is, you accept the offer. It is not compulsory to

>I have the ability to buy and sell these notes on the open market

Generally such notes will be quoted on the New Zealand debt market.
So in that sense you have the ability to buy and sell. However,
sometimes such notes are not as liquid as the equivalent shares. In
other words your ability to sell on market is determined by whether
there are buyers for them. This is not guaranteed on any particular
day. But if you decide to get some of these notes and hold them until
maturity then the fact that they may not be as liquid as the alternative
share investment need not be of concern.

> and take my shares back in
>2004 or 2005 for the same 5 for 2 ratio?

Just because they offer you five notes for every two shares does not
necessarily mean that when they convert back they will offer you five
shares for every two notes. You will need to study the fine print of the
offer to see what the reconversion to shares terms are. You haven't
quoted enough detail for me to be able to answer that question.

>What are the disadvantages/advantages of
>taking up this offer?

The advantage is you will get more income from the capital you
currently have tied up in those GPG shares (because GPG shares
have a very low dividend yield).

The disadvantage is that you will lose any capital gain potential from
any shares you convert to notes, until you convert them back into

>is it separate from the usual 1 for 10 share split?


And lastly two comments on Mike M's response.

With an off-market offer, this means you will not be able to sell off your
rights to accept the offer. However, once you have accepted the offer
and the offer is closed this doesn't mean that you will not be able to
sell the notes on the open market. You may or may not be able to sell
the notes once they exist. That is a completely separate issue to
selling the rights.

Mike M also says that you should be wary of unsecured notes. This is
a good cautionary approach to take. However, not all unsecured notes
are bad. Mike suggests that perhaps GPG don't have the cash to buy
the shares back outright, but I don't think that is the issue in this case.
I think you will find it is a capital management issue. The thinking here
is that if GPG can reduce the number of shares on issue then their
earnings per share will improve which should cause the share price to
rise, for all those shares that remain.

Mike M also says that unsecured creditors will be at the back of the
creditors queue. He is right in the sense that if anything does go
badly wrong at GPG the banks will have their loans repaid first, which
may mean nothing for you as an unsecured note holder. However all
bond holders and note holders will still be paid out ahead of
shareholders. So because you are exchanging shares for notes you
are actually at less risk of losing your capital if you accept the offer.
However, I wouldn't make a big deal out of this. Both GPG shares and
GPG unsecured notes would both be classified as relatively less
secure investments in a balanced investment portfolio.


Message sent by Snoopy
on Pegasus Mail version 4.02
"Q: If you call a dog tail a leg, how many legs does a dog have?"
"A: Four. Calling a tail a leg doesn't make it a leg."

To remove yourself from this list, please use the form at

  IncrediMail - Email has finally evolved - Click Here



Messages by Date [ Next by Date: [sharechat] DPC Richard Hooper
Previous by Date: Re: [sharechat] GPG notes ]
Messages by Thread [ Next by Thread: Re: [sharechat] GPG notes
Previous by Thread: Re: [sharechat] GPG notes ]
Post to the Forum [ New message Reply to this message ]