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  1. #4581
    On the doghouse
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    Quote Originally Posted by greater fool View Post
    Any interest from Elders in 'rural rump' may evaporate now?

    https://www.smh.com.au/business/comp...15-p527ac.html
    Interesting. I don't follow Elders that closely, and I kind of assumed that they would have had a 'wholesale' division like PGW with 'Agricom'. Yet it turns out they don't!

    Buying the unlisted private wholesale buying group 'Australian Independent Rural Retailers' will certainly fix that for Elders.

    "Last month the consumer watchdog raised concerns over the proposed takeover of Elders' rival RuralCo by Canadian fertiliser giant Nutrient Ltd, stating antitrust fears and potential discrimination against some independent retail stores."

    That comment indicates that RuralCo must have a wholesale division. Without a wholesale division, there would be no way to discriminate against independent retail stores.

    Elders management seems to be making all the right noises about their prey:

    "By preserving continuity of AIRR's key management team and independent identity through a light touch integration, AIRR will continue to deliver the benefits to its independent members which have enabled it to achieve a track record of consistent growth."

    But Elders also said:

    "The company said the acquisition would allow it to enter the wholesale rural services market with net synergies of $6.6 million to $9.33 million per annum to be gradually realised over the next two years."

    So Elders are looking at a 'light touch integration'. Yet they are still looking for up to $9m in synergy benefits? It sounds like they might be looking at a 'sweetner deal' for their own shops and that would surely undermine the independent retail competition.

    "Established in 2006, AIRR is a member-based buying and marketing group for independent rural merchandise and pet and produce stores."

    If AIRR is indeed owned by downstream retailers, it would appear that the sale of AIRR to Elders is a footshot! I wonder if the existing AIRR shareholders will vote for this deal?

    "Elders has made a $187 million scrip and cash offer for unlisted private wholesale buying group Australian Independent Rural Retailers."

    That offer is a bit below what they would need to acquire all of PGW. But given the $137m equity raising associated with this AIRR takeover, you would have to assume that should Elders try to acquire PGW, they would have to raise at least that much in new equity again. Would Elders shareholders go for another capital raising so soon?

    SNOOPY
    Last edited by Snoopy; 16-07-2019 at 07:48 PM.
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  2. #4582
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    Quote Originally Posted by Snoopy View Post
    That offer is a bit below what they would need to acquire all of PGW. But given the $137m equity raising associated with this AIRR takeover, you would have to assume that should Elders try to acquire PGW, they would have to raise at least that much in new equity again. Would Elders shareholders go for another capital raising so soon?

    SNOOPY
    Comes down to whether Elders is successful with integrating AIRR into its fold and realizing said synergies etc.

    Elders shareholders have certainly done well since the dark days of 2014 when its sp went below $1.00 so as long as current management continue delivering, there is no reason why they would not support more growth and capital raising.

  3. #4583
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    https://www.nzx.com/announcements/337127

    SM to approve capital distribution now in progress.

  4. #4584
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    Quote Originally Posted by Balance View Post
    https://www.nzx.com/announcements/337127

    SM to approve capital distribution now in progress.
    Home and hosed.

    Still intend to use this cash-back facility to re-buy PGW shares.
    But come the day I may just extend by travels
    om mani peme hum

  5. #4585
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    Default A quadruple pension whammy

    Quote Originally Posted by Snoopy View Post
    1.543%. So it has almost halved since EOFY2018 (was 2.85%) and more to come!

    At 19th May, the date of the pro-forma balance date, the rate was 1.77%. So it has come down a lot more, even in just six weeks.

    If it gets down to 1% then PGW might need a $20m (not $10m) capital injection into the pension scheme, assuming the earnings of the scheme remain flat. But if interest rates fall, then those fixed interest returns will fall as well. So even more money will have to be pumped in just to keep the future earnings stream steady.....ouch....ouch
    Ten year government bond has recovered to '1.56%' at the end of 24th July. But Westpac economists reckon it is headed for 1.0%!

    Quote Originally Posted by BlackPeter View Post
    Actually - quite stupid method to determine the required capital for a pension schema. I am wondering what they are doing at the point in time the interest rate turns negative (as it already is in some parts of the world - i.e. this is a when, not an if)?

    Wouldn't they need in this case an infinite amount of money to fund their funny schema?
    Quote Originally Posted by winner69 View Post
    Is a dilemma BP butthey will find a ways around it

    https://www.ipe.com/pensions/pension...016338.article

    “This is for a pure economic reason,” he adds. “If a pension fund makes a promise to stakeholders, it cannot pretend that the promise is as strong as government guarantee. Pension funds cannot print money. A promise a pension fund makes to stakeholders is no different from a promise made by a corporate to repay an investor. Pension funds’ strategies should reflect that dynamic when they think about discounting and matching.”
    Maybe the 'get out of jail' tactic is to let those vulnerable pensioners get so old that they are unable to legally fight back? A ninety year old in their sick bed is ripe for exploitation. What would they do if PGW were to 'solve' their 'pension plan crisis' by ceasing to pay them?

    "We cannot pretend that the promise of a pension is as strong as government guarantee."

    Sounds like a good line for Stephen Guerin to roll out at the September AGM.

    I abstained from voting at he recent SGM where the capital repayment was voted on. I was for a capital repayment. But I think just $10m of that repayment diverted to bail out the pension scheme (for the moment) would have been a good decision. Both for the pensioners and for shareholders as it would remove a significant reduction in funding uncertainty. And markets do not like uncertainty!

    The problem has not only not gone away, it is only getting bigger in relative terms. I think we are now effectively back to FY2016 when a five year bail out of the pension plan (so far ineffective) was announced.

    Whammy 1/ 10 year government bond rate, (that determines the pension scheme discount rate) down from 1.77% to 1.56% since last disclosure in mid May.

    Whammy 2/ Reduced interest earned from underlying fixed interest investments that fund the pension scheme is consummately reduced. So more capital will be needed to generate the budgeted income.

    Whammy 3/ As the scheme beneficiaries get older and payout requirements get closer, there will be a need to move more of the portfolio to fixed interest investments with less to growth assets.

    Whammy 4/ The size of the funding company is now significantly reduced. Instead of PGW backing the pension scheme, we now have a much smaller company PGWRR that is required to service the pension scheme deficit.

    I think that if pensioners are to be paid their dues, then we shareholders will need to put $20m from here into the pension scheme in the end. It could even be $30m if those interest rates stay stubbornly low for ten years. Why as a shareholder am I concerned? Because PGW is now capitalized for borrowing up to $70m to meet seasonal financing requirements. And if close to half of that funding must be fed into the pension scheme, then PGW Retail will not have the capital to stock their shelves. And that means customers will go down the road to buy their supplies from the opposition. This has the potential to turn ugly for both pension scheme beneficiaries and shareholders!

    SNOOPY

    discl: worried shareholder
    Last edited by Snoopy; 26-07-2019 at 07:39 AM.
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  6. #4586
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    https://www.nzx.com/announcements/338405

    Capital return money in the bank in 2 weeks if you hold next week.
    om mani peme hum

  7. #4587
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    Hi, I’m kind of a hobby investor familiar with the basics of share investing but am finding this capital return and share consolidation confusing. If I had say 10,000 PGW shares (I have more than that) then at current share price of 55c they are worth $5500. I would get a capital return of 31c per share, so $3100? or does receiving a share for every share held mean I would i get a capital return of $6200? Then my 10,000 shares would get 1-for 10 consolidated to 1000 shares. Would those then be worth $550 at current share price? Or does the post consolidation share price change?

  8. #4588
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    Quote Originally Posted by bryndlefly View Post
    Hi, I’m kind of a hobby investor familiar with the basics of share investing but am finding this capital return and share consolidation confusing. If I had say 10,000 PGW shares (I have more than that) then at current share price of 55c they are worth $5500. I would get a capital return of 31c per share, so $3100? or does receiving a share for every share held mean I would i get a capital return of $6200? Then my 10,000 shares would get 1-for 10 consolidated to 1000 shares. Would those then be worth $550 at current share price? Or does the post consolidation share price change?
    ............................................10,000 shares at 55 cents is $5,500
    ..............................................less 31 cents ps................-$3,100
    .................................................. ...........equals...............$2,400.
    So after consolidation your 1,000 shares will be worth..........$2,400 or $2.40 per share.
    Last edited by percy; 01-08-2019 at 12:39 PM. Reason: 10,000 at .55 is $5,500 not $5000

  9. #4589
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    Quote Originally Posted by bryndlefly View Post
    Hi, I’m kind of a hobby investor familiar with the basics of share investing but am finding this capital return and share consolidation confusing. If I had say 10,000 PGW shares (I have more than that) then at current share price of 55c they are worth $5500. I would get a capital return of 31c per share, so $3100? or does receiving a share for every share held mean I would i get a capital return of $6200? Then my 10,000 shares would get 1-for 10 consolidated to 1000 shares. Would those then be worth $550 at current share price? Or does the post consolidation share price change?
    Hi Bryndlefly. Here is my read on it. Like you I am in the less qualified category of investor so no guarantee I am right. The issuing of the additional shares alongside the capital return is a bit of a smokey. It is just to serve as a mechanism for the capital return. In theory when the capital is returned you will retain 10,000 shares, the share price will drop to 24c and you will receive 31c. A week or so later when the 10 for 1 consolidation occurs your number of shares will reduce to 1,000 and in theory the market response would see the share price rise to $2.40. In real life the market doesn't work on theory alone and there will be some variances to this.
    Last edited by Rossimarnz; 01-08-2019 at 10:22 AM.

  10. #4590
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    Hi thanks for the replies. The other thing that I'm not sure about with a share consolidation - i keep track of my shares with the ASB Securities portfolio feature, if i paid say 50c per share for PGW shares originally, i think a post consolidation share price of possibly $2.40 would show in my portfolio as a share price increase of 480%, which wouldn't be correct. I guess post consolidation i would need to change the value of what i paid for the shares? Unless the ASB portfolio function changes that value automatically. Sorry i should really know about this sort of thing by now.

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