Savings Product Review: Carter Holt Harvey Shares

Wednesday 1st February 2006

What is it called and what sort of savings product is it?
Carter Holt Harvey ordinary shares (CAH). They are a speculative investment opportunity at the moment.

Who is the company behind it?
CAH is one of the biggest listed companies on the stock exchange and it is currently subject to a takeover offer from Rank Group, which is the investment vehicle of New Zealand's richest man - Graeme Hart.

Who is the target market?
CAH shares appeal to speculative investors who think that Rank will fail to get buy 90% of the shares, which is the trigger point where it can compulsorily acquire all the outstanding shares. If Rank doesn't get 90% then the company will remain listed and therefore tradeable on the NZX.

What return does it offer?
Possibly quite bit more than the $2.50 takeover price Rank is offering. Goldman Sachs JB Were, for instance, is telling clients not to sell while CAH is "in its darkest hour."
"Investors with an appropriate investment horizon and an appetite for risk should find CAH of interest," it said in December.

When was it launched?
Rank launched its takeover offer on August 31, it has been extended six times already and can be extended through to February.

What other products is it like or is it competing with?
CAH is an individual share listed on the NZX, but it is one of a few which offer such clear speculative play.

Is it long term, short term or medium term?
It is a short-term play in terms of whether Rank gets to 90%. Assuming Rank doesn't reach its target it will probably be a couple years until restructuring benefits, and economic changes deliver a higher share price, or Rank makes a new offer.

What is the unique selling point?
It's a speculative play and an opportunity to benefit from the business expertise of New Zealand's richest man Graeme Hart.

How strong a stomach do you need for it?
Moderate to strong.

What's the hitch?
Rank wins the battle and buys your shares at $2.50 each. If you paid more than that you lose.

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