Sky City share offer confusing and unfair for smaller shareholders

I was going to discuss the merits of owning Contact Energy Ltd [CEN.NZ] shares in the light of takeover signs surfacing recently over that company but I will leave it to another day.

I will instead focus on something today that has left me scratching my head.

Many of those that follow my media machinations closely will know that I own a reasonable number of Sky City Entertainment [SKC.NZ] shares.

There has been a recent capital raising to institutions and large shareholders and now we smaller unimportant shareholders are about to have their opportunity to buy an additional stake to avoid dilution of our shareholdings.

Today I received "top-up" offer documents that allow me to buy 1269 shares in the $5 million offer but I have to be either an "experienced" or "wealthy" investor to participate and I must get a "certificate" from my chartered accountant or my "financial service provider" to prove I am either so I can get my new shares.

The only problem is that I don't have either of the above but then I read on that I will probably not be eligible anyway because the top up offer is conditional on the $35 million Share Purchase Plan (SPP) not being fully subscribed, which is highly unlikely to happen given major oversubscriptions in popular capital raisings thus far completed by listed New Zealand companies.

The other wee problem is that I haven't received the SPP documents or booklet that the covering letter says I should read to determine whether I should consider the offer.

The top up offer seems superfluous to requirements because it gets canned if there is an oversub of the SSP but even if there was going to be a top up many wouldn't bother because they have to be "wealthy" (have net assets of $2 million or gross income of more than 200k for each of the last two years) or be an "experienced investor" and be able to prove both using your accountant or financial advisor.

I really cant be bother with the top up because I cannot bloody fully understand it! and it seems to run counter to commonsense because it probably wont occur anyway.

All I am entitled to then is to apply for a maximum of NZ$12500 of shares and it seems given the large interest in the $230 million SKC corporate capital raising carried out in April and an over subscription in the Fletcher Building offer concluded this week, I am unlikely to get anything close to that figure.

I would need to get my hands on around 5000 shares at the offer price of $2.61 per share in order to stop dilution of my position but unlike the corporates and large shareholders my shareholding in Sky City Entertainment of 7 years is going to be seriously diluted.

I will be applying for the maximum under the SSP.

Contact Energy will follow soon.

Sky City @ Share Investor

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Discuss SKC @ shareinvestorforum.com

Download SKC Company Reports

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c Share Investor 2009

Fisher & Paykel Appliances future looking bleak

For those of you who have followed my rantings on this that and the other over the last 2 years or so, you will know I haven't got much time for Fisher and Paykel Appliances [FPA.NZ] the so-called "kiwi business icon" and today is no exception.

Get ready for another rant.

It has been poorly run for many years and was only a success largely because of protectionism in New Zealand and has fought that protectionism and lost the battle.

To me Fisher and Paykel Appliances is looking terminal. It has more than half a billion of debt on its books, with a massive slashing of its sales and profit, and bleak hope for the future.

The company is technically bankrupt.

For management to blame the current credit meltdown is moronic and dishonest at best. There has been clear evidence of a spiraling down of company fortunes over the last 10 years, not the least the massive debt that has been allowed to build up.

It shows the lack of forward planning that management did nothing about that debt until the very last minute and it is only the current dire credit climate and global economic circumstances that have accelerated an inevitable credit crunch.

FPA management have been blessed with less foresight than an Al Gore devotee with a blindfold on that they couldn't see the end coming.

The simple fact that it has taken more than six weeks to find some poor sucker to poor millions of dollars more into this loser shows the less savvy investor that nobody really wants to touch it with a 10 foot dish draw.

Having said that what the company does have to its advantage is one or two products that could be useful to another company looking for an edge in the whiteware market and a brand name with just enough cache left that could be used by a more competitive and well managed whiteware manufacturer.

For that reason alone the best thing for the company is for it to be broken up and sold.

That is sad, but some "business icons" have their best days behind them and Fisher and Paykel Appliances is definitely one of those.

Will the company survive?

Unlikely in its current form.

Fisher & Paykel Appliances @ Share Investor

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c Share Investor 2009

Nicky Watson reveals her biggest Assets!

Nicky Watson was initially asked to compete in a competition where she was to walk, breathe, talk and think at the same time.

Unfortunately she got sick that particular day and could only do two of the above.

Well her sickness gave her the ability to show how truly talented she actually is.

You can see from the picture at left that all she has to offer is on display and just what a display it is!

Oh, just how beautiful those eyes are and oh that lovely blond hair.

It makes you wish you were a younger or richer man.

Oh how talented little Nicky is!

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Warren Buffett faithful ready for big Weekend in Omaha

A big thanks to those of you who contacted me over a doco to be made of Warren Buffett by the BBC around Berkshire Hathaway shareholders and the Berkshire 2009 Annual Meeting in Omaha Nebraska that kicks off this weekend.

I have had many replies, and none more so than the following one encapsulates the deep feeling and respect this great investor and thoroughly interesting man seems to capture from his many millions of followers, including myself:

"I understand you are looking for Berkshire shareholders. I have been a Berkshire shareholder since 2001.

I can say with some confidence that Warren Buffett and Charlie Munger are more important in my life than God! I am a university graduate and a Chartered Accountant. I have worked in businesses for over 25 years but any knowledge I have acquired from these experiences is like a pebble in ocean in comparison to what I have learned from Warren and Charlie.

If you study Berkshire and the people behind it you are tapping into a rich reservoir of knowledge and wisdom that has proved incredibly useful in the real world of business over a long period of time. The Berkshire values are very old fashioned and very simple. It is about taking the long term view, common sense, humility, rationality, hard work and prudence.

Much of what goes on in the world of business and politics looks absurd and grotesque when viewed through the Warren Buffett lens. Why are people so loyal to Warren Buffett and Berkshire? It is just pure Disney. Failing textile mill, Berkshire Hathaway, taken over by young investor Warren Buffett. Investment is a terrible mistake. Buffett uses the company as his investment vehicle choosing not to take a management fee from his fellow shareholders. Over time the company evolves into one of the largest and most respected companies in the world. Warren Buffett turns out to be the greatest investor ever and becomes the richest man on the planet. In the end it’s not about the money and Warren gives the bulk of his fortune to the children of Africa. Who would not want to be part of this?

Good luck with your documentary. It will be easy to make the shareholders look like crazy America cult members. I know the BBC will go deeper than that." Gareth, Northern Ireland.

What Buffett has to say this weekend will be covered by media from around the world and more than 35,000 people will be attending in person to get his pearls of investing wisdom sieved through a down home style of old fashioned hokiness and a wonderful sense of black humour.

The world will be watching closely for some explanation of his frenzied buying activities over the last year and also his view of economic conditions over the following 12 months and of course the years to come.

I will be watching closely and you can keep up to date on what is more commonly known as the "Woodstock for Berkshire Hathaway Shareholders" at Everything Warren Buffett.

Until then I highly recommend reading his 2008 Annual letter to Berkshire Hathaway Shareholders published in February of this year. It will change your way of thinking about investing .

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c Share Investor 2009