RAK Rakon

[Master98]

My prediction is that RAK will be taken over this year ... Or maybe next at the latest!

unlikely,I think Robson family still a majority shareholder unless they agreed.

[Under Surveillance]

My prediction is that RAK will be taken over this year ... Or maybe next at the latest!

You’re on to it, Belgarion.


Word is about that several would-be buyers have been sniffing around this dog, but the Robinsons and Mogridge have sent all but one of them packing.


The one being given time of day is said to be a syndicate of Nigerian and Russian origins, which the RAK elite is apparently strongly attracted to after being exposed to the bare bones of a possible full takeover offer. In prospect is a 1:1 exchange of scrip, with RAK shareholders getting one unit in the syndicate’s fund per share held. The fund trades on one of the alternative boards on the Slovenian exchange. Early indications from the syndicate are that the offer will value each RAK share at around 215 cents at stable exchange rates.


The fund has shown spectacular price growth per unit over the last 3 months, albeit on small turnover. The fund has glittering assets, including a large stake in King Solomon’s mines. It has a highly-profitable wealth management extraction unit specialising in unclaimed international inheritances and lottery prizes. One the Russian front, the fund holds invaluable letters of intent related to an impending PPP (Putin Private Partnership) covering a chain of gulags. Elements of each gulag are to be converted to 5 star resorts to tap into the elite end of western and asian tourist interest in the Pussy Riot phenomenon whilst PR members and followers are on location to add authenticity to the visitor experience. The fund has also been spectacularly successful with seed capital investments in cutting edge technologies; one of these is based in NZ and involves collaboration with blue chip companies MAD and PGC in developing a perpetual battery, with top end components from RAK incorporated, to assist the relocation overseas of Torchlight Fund No 1. There’s also a whisper that the fund is well in with a Chinese entrepreneur named Hooey Why (? sp) whom RAK is courting in the hope of extracting itself from redundant product.

The Robinsons and Mogridge are enthused by fulsome approvals of the impending offer from expert consultants, including David Ross as to the value of the mines, Mark Hotchin on the Russian real estate, and Rod Petricovich and George Kerr on the wealth management extraction business. They are also buoyed by a likely side deal whereby they retain their directorships and executive roles indefinitely, along with all perks, including the 7 series BMW with the RAKON plates, without having to shift from NZ.


There are, apparently, still a couple of sticking points in the way of the RAK board unanimously supporting the offer in principle. One is that Mogridge wants a cash component to on top of the 1:1 exchange of scrip, of at least 2 cents a share. Mogridge wants to channel this to RAK shareholders by means of a special part-imputed dividend to be paid immediately before the takeover is effected. The Robinsons consider this a masterstroke, as it will help stop longstanding shareholders bemoaning that RAK never paid a dividend, and will make practical use of the imputation account.


Another sticky item is that the Robinsons, supported by Mogridge, want a side deal whereby existing board members get extra scrip for facilitation of the early relocation of the research unit and intellectual property to Minsk and/or Abuja.


Also yet to be agreed is Brent Robinson’s request that the offer documents from the syndicate declare that the offer would not have proceeded but for the syndicate’s admiration of the business excellence of Brent Robinson, excellence recognised by his Kiwi peers making him a finalist in the internationally-esteemed NZ Entrepreneur of the Year Award 2012, sponsored by Ernst and Young.

[Stranger_Danger]

Hahahaha. Excellent effort.

[Balance]

Sensational!

[golden city]

RAK is my nightmare..., i bought it in 99c.., just woke up and see it down to 76c..after the downgraded., i was glad i sold it at 76c, loss 70k., luck i bought in cvt ..has double my investment., so break even in the year...

[Balance]

Golden City - count yourself lucky to have sold out at 76c. It is now half that.

I am beginning to wonder at what point does Rakon look attractive as an investment? Are they so stuffed that they can't recover under Clan Robinson? Is there a price that represents Rakon de-risked?

The share price suggests a market cap of $70.6m

Yet if you consider page 6 of their 2012 annual report, it suggests total equity of $194m. That should represent a share price of $1.01 a share.

Now, if I switch the BS detector on, and make some big changes:

- report inventory at $25m firesale value instead of $49m
- report property and plant at $75m instead of $90m
- report intangibles at zero (no goodwill) instead of $31m

Then total equity becomes $124m instead of 194m with the $70m writedown I've made.

$124m / 191m shares = 65c

What am I missing?

You are doing a liquidation scenario - in which case, inventory would be lucky to fetch $10m and special purpose plant and property would be worth all of $30m max.

Rakon is in a fast moving industry where the big boys have moved in. Game over.

[Balance]

Yeah, but are they well and truly screwed, or are they just stagnating?

I ask this, putting aside the jokes and jibes about Mogridge etc, because if we take into account your more brutal assessment on what inventory and plant are worth, then they are worth $64m, or on a per share basis, $64/191m shares = 33.5cps

They are getting very close to that (currently 37c), in which case they represent an investment with little downside risk meaning

- someone buying in at 33.5cps will probably get most of their money back if RAK goes into receivership
- someone who reckons they can run it better can swoop in at a very cheap price

Rakon might be a lousily run company over the last few years, but as a share, is it near enough to de-risked?

I have learnt the hard way over the decades to leave dogs alone.

They are poorly fed, ill-tempered and liable to take a chunk off you at any time.

Rakon to me is one sick dog but with the potential to give you one last nasty bite.

As for Mogridge, I think he has squandered all the credibility and goodwill he built up over the 90s with CIL and Montana - selling his name to the likes of George Kerr etc.

[Grimy]

I have learnt the hard way over the decades to leave dogs alone.

They are poorly fed, ill-tempered and liable to take a chunk off you at any time.

Rakon to me is one sick dog but with the potential to give you one last nasty bite.

As for Mogridge, I think he has squandered all the credibility and goodwill he built up over the 90s with CIL and Montana - selling his name to the likes of George Kerr etc.

Ah yes, I bought into BIO. Product, demand, big talking. Lost the lot. The lowest a stock can go is zero-not some calculated sp.........

[lowrolling]

Rakon might be a lousily run company over the last few years, but as a share, is it near enough to de-risked?

Is this the same case for BLT?

[Master98]

RAK is not like BLT where they actually own land, plant and have other things with liquidation value. I doubt RAK will go to zero in price, though I agree it is theoretically possible they could.

I believe RAK has a price where it no longer represents a real risk to shareholders. I don't believe that price has been reached. And if I was to hazard what that price is, I would suggest 30c based on valuing inventory at $10m rather than $49m, no goodwill, and the land being worth a quarter of $90m property value listed (the land is worth something even if the specialist factories are not).

You said Rakon own land, as I know in china they only own part of the factory not land, in NZ all building owned by Robson family and leased back to Rakon, I don't know the part of indian and Europe.