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Of Bulls & Bears

Friday 21st July 2000

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Bendon has feet of clay at web site

In keeping with the disposal of its china clays business and new focus on apparel, Ceramco Corporation changed its name on June 1 to Bendon Group. Its annual report just out shows the new name throughout, as one might expect, including its new website address at www.bendon.co.nz. Unfortunately, those who attempt to visit the site are met with an error message that says: "the domain name does not exist." Even more unfortunately, the address www.ceramco.co.nz is still live and telling the world about the wonders of its china clays business. Prominently displayed on the home page is a reference to its clays that reads: "In an ever changing world few things stand against the ravages of time." The exception appears to be Ceramco's web site.

BIL comes back to DB Group

Brierley Investments' announcement on Monday that it owns 6.9% of Singaporean food and beverage group Fraser & Neave is a deal rich in irony. It is not the first time the two companies have crossed paths. Fraser & Neave owns part of Asia Pacific Breweries, which in 1993 bought a controlling interest in DB Group. It helped achieve this by paying $115 million for BIL's 27.3% stake. APB got a good deal because DB was in financial difficulties, reporting a loss the previous year of $233 million. Many people put the blame for the problems of DB, formerly Magnum Corporation, on a $240 million special dividend made to shareholders in 1989. The initiator of the dividend was none other than BIL. At the 1993 annual meeting one shareholder was moved to say "BIL has brought disaster, disaster, disaster to DB." Ferdinand wonders what the reaction will be to BIL's return, albeit indirectly.

Voice from the past tells FCL off

Fletcher Challenge's decision to break up and sell at least some of its divisions to the highest bidder was seen by many to make a lot of sense. The former "targeted" or "letter" shares concept was widely condemned as having failed. What a pity then, that the company did not heed an Australian broker's report of August 1992 that proposed a break-up even before the company had come up with its targeted shares concept. "The way to optimise the underlying value of the asset base is to float off three divisions: forestry, construction and energy," author George Ratopulos of Baring Securities said. "You release an enormous amount of money which goes to the holding company and makes it debt-free. It also allows underlying entities to be valued at real value, which is not happening at present." Investors could have been saved a lot of pain if the company had taken heed.

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