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Re: RHG - Rams Home Loans
A 25% recovery yesterday - but will it hold? One can only hope that those shareholders do.
This from today's Age:
Small flock OKs Rams' final fleecing
Email Print Normal font Large font AdvertisementAdvertisementDanny John
November 27, 2007
THEY arrived and left as gentle as lambs. Herded into a Sydney conference room and shorn of almost all value, Rams shareholders handed over the best-known part of the briefly listed mortgage lender without a bleat of anger or protest.
Resigned to the inevitable that nobody but Westpac wanted a business that had been crunched so hard by the global liquidity crisis, investors voted by almost 12-1 to sell the brand and its franchise operations.
Of the four resolutions put to the 100 or so shareholders who bothered to turn up, chairman and founder John Kinghorn said the saddest was that authorising a change in the company's name from Rams to RHG Group.
As the company's biggest shareholder with 20%, even after selling down $650 million worth of stock before listing just four months ago, he was duty bound to vote in favour given the lock-in terms to which he and Rams' directors had agreed as part of the deal with Westpac.
Neither did he nor his band of small and institutional investors have any choice but to say yes to Westpac's offer of $140 million for the main business given his own startling admission to the meeting that Rams was "no longer a going concern". It was the closest Rams came in three months of trying but failing to refinance $6 billion of loans from global credit markets to accepting publicly that it was a business in name only. Now it doesn't even have that.
Mr Kinghorn remained hopeful that its attempts to replace its once-cheap sources of borrowings with new debt would eventually succeed, albeit at a much higher cost, which would eat into what profits it had left.
"It is inconceivable that the (credit) markets will be closed forever," he said.
Rams shareholders at this point will get virtually nothing from Westpac's $140 million and only a promise of a full distribution of any surplus cash from the run-down of Rams' remaining $14 billion mortgage book.
They, of course, can sell their shares. However, at yesterday's closing price of 29.5 ¢, those investors who bought in at $2.50 at the end of July face an 88% loss on their investment.
But not even that was enough to prompt a despairing question or comment about shareholder value from the floor.
Mercifully, for Mr Kinghorn and his fellow directors, it was all over in half an hour flat. And flat basically summed up the mood and RHG's immediate prospects.
(Disclosure - holding long term as highly speculative)
A 25% recovery yesterday - but will it hold? One can only hope that those shareholders do.
This from today's Age:
Small flock OKs Rams' final fleecing
Email Print Normal font Large font AdvertisementAdvertisementDanny John
November 27, 2007
THEY arrived and left as gentle as lambs. Herded into a Sydney conference room and shorn of almost all value, Rams shareholders handed over the best-known part of the briefly listed mortgage lender without a bleat of anger or protest.
Resigned to the inevitable that nobody but Westpac wanted a business that had been crunched so hard by the global liquidity crisis, investors voted by almost 12-1 to sell the brand and its franchise operations.
Of the four resolutions put to the 100 or so shareholders who bothered to turn up, chairman and founder John Kinghorn said the saddest was that authorising a change in the company's name from Rams to RHG Group.
As the company's biggest shareholder with 20%, even after selling down $650 million worth of stock before listing just four months ago, he was duty bound to vote in favour given the lock-in terms to which he and Rams' directors had agreed as part of the deal with Westpac.
Neither did he nor his band of small and institutional investors have any choice but to say yes to Westpac's offer of $140 million for the main business given his own startling admission to the meeting that Rams was "no longer a going concern". It was the closest Rams came in three months of trying but failing to refinance $6 billion of loans from global credit markets to accepting publicly that it was a business in name only. Now it doesn't even have that.
Mr Kinghorn remained hopeful that its attempts to replace its once-cheap sources of borrowings with new debt would eventually succeed, albeit at a much higher cost, which would eat into what profits it had left.
"It is inconceivable that the (credit) markets will be closed forever," he said.
Rams shareholders at this point will get virtually nothing from Westpac's $140 million and only a promise of a full distribution of any surplus cash from the run-down of Rams' remaining $14 billion mortgage book.
They, of course, can sell their shares. However, at yesterday's closing price of 29.5 ¢, those investors who bought in at $2.50 at the end of July face an 88% loss on their investment.
But not even that was enough to prompt a despairing question or comment about shareholder value from the floor.
Mercifully, for Mr Kinghorn and his fellow directors, it was all over in half an hour flat. And flat basically summed up the mood and RHG's immediate prospects.
(Disclosure - holding long term as highly speculative)
second time lucky with RHG 
