Snoopy folds the tent (mostly) :-(
Quote:
Originally Posted by
Snoopy
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Combining those two effects and fair value from Simmons looks to be:
$3.50+$0.16+$0.14= $3.80
That price includes the 20c dividend (already paid). So 'hold out' shareholders look on target for $3.60 per share. Not great when $3.95 is already on the table.
If Simmons has the courage to tackle the net asset value question, then we could be looking at a payout of $4.95 for hold out shareholders. I rate the likelihood of that as about 10%, verses 90% for the other option. So the 'expected value' of the Simmons mandated payout would be:
0.9 x $3.60 + 0.1x $4.95 = $3.74
That is less than the $3.95 already on the table. Logic tells me I should fold my cards and accept the offer on the table. And yet....
OK, made my decision. I am selling around 90% of my LPC shares into the offer and keeping around 10% in the 'hold out' bunker.
My deciding factor in the end was pragmatism. This LPC takeover will be my biggest ever payday from the sharemarket. Frankly I don't think I can leave all my capital repayment to chance. If Simmons comes back with a higher valuation than Northingtons (and I think he will), ironically I will actually lose capital (for me a significant amount) because the CCHL $3.95 offer price on the table is so far above the $3.30 Northington valuation, and still above the likely Simmons value.
However, I would like Simmons to do his alternative evaluation. For that reason I have left 10% of my shares in the 'hold out' pot. I have further decided I can afford the loss that the Simmons valuation might lead to on that proportion of my shares.
I realise this decision will probably lose me my LPC fan club base. But I see no point in being pious in the poor house. Better to keep most of my capital and use this surviving 'sympathetic capital' to fight another battle another day in another place.
My main message here is for remaining shareholders to think how much of their capital they can afford to put on the line. I hope Mike Daniel holds out and there are enough non accepting shareholders to force another evaluation. But if Mike Daniel's, bet doesn't come off, that is probably the equivalent of only one years FPH CEO's bonus lost. IOW he can afford to lose. I have nothing like as much capital at stake as Daniel, but then I am not CEO of an NZX top 50 company. In proportion my potential loss would be greater than his if I held out.
Sorry for folding the big tent, but in the end I have to be pragmatic about this. And I do at least have a pup tent remaining so I have some skin in the game for the fight that remains.
SNOOPY