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Gold/Mining/Energy : Avenor (avr-tse) - Repap buyout (rpp-tse)
AVR 4.090-2.9%3:40 PM EST
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To: John Bull who wrote (118)3/19/1997 1:42:00 AM
From: Randyfb   of 290
 
John, thanks for your reply. I believe that the 8:1 ratio was done to make the deal acceptable to Avenor shareholders. They would not want to give Repap shareholders a big gain based on current share prices. Even at 7:1, Repap shareholders would see a 30+ percent gain based on Avenor at $21.75 and Repap at $2.35. 8:1 makes it easier to get Avenor shareholders to approve. As for Repap, I don't see they have much choice. I disagree with those on this thread that think Repap can survive without Avenor. On todays news (BC TV), forestry workers in Terrace BC protested the governments stumpage fees and forestry practices code which are costing companies big dollars. They were also very upset with Repap BC, which has filed for bankrupcy protection and owes private contractors $30 million. They want the government to cover the $30 million with the forest renewal fund. Repap also has $140 million of debentures due this summer. Where will they find the money to cover this? No one will want to take the risk, there are better investments elsewhere. For those who believe Repap is a safe investment, buy the debentures... they are yielding 29.31 per cent at the current price. Wonder why? Just noticed the Repap shares closed at $2.05. Buying them now and converting 8:1 to Avenor shares at $21.75 is still a 30 percent gain. Very tempting, but the risk of the deal cratering and leaving me with possibly worthless Repap shares is too risky. (Only my opinion of course)
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