Total PGW shares on issue at 31 July 2009: 315,815,616
STEP 1:
Agria to be issued shares representing 13% of the compnay:
0.13a + 315,815,616 = a => a=363,006,455 (new share total B4 rights issue)
That means the number of shares initially issued to Agria is:
0.13x 363,006,455= 47,190,839
STEP 2:
9:8 rights issue
=> 363,006,455[ 1+(9/8)] = 771,388,717 (total number of shares after rights issue)
STEP 3:
Projected NPAT of $24.1m means projected earnings per share of:
$24.1/ 771.4m = 3.1cps.
If you can buy shares at 45c, this represents a projected PE ratio of
45/3.1= 14.5
This is of course a 'low cycle' result. If you believe Norgates vision for the potential of PGW, the underlying business will earn $40m per year in 'normal' times. Add to that the interest rate savings caused by $277m of debt being retired (at 8% that equates to 0.7x$22.2m=$15.5m after tax ) and you get a potential net profit of some $55m or 7.2cps.
At 45c you are buying on a 'Norgate wish PE' of
45/7.2= 6.25
So is 45c a bargain or not? I guess it depends how you see things panning out after the cash issue money is raised!
SNOOPY
discl: hold PGW (and will be taking up all my rights.)