Hi, folks. Since I own REL, I've been following it. Rumours have abounded on this stock. IR at REL a month ago said various brokerages suggested possible takeover prices: Newcrest $4.50, First Marathon $4.50, Peters $7-$9. Recent rumours in the sector and brokerages have been that REL received three bids, but none of them are great. I looked at NAV using the most recent reserve report ( Oct 30/98), and would put it at $6.50 - $8.00, using current debt (approx. 310 mill) and depending on discount, etc. The bridge financing that REL obtained for an acquisition in August has been extended to April 1 for payment ($60 million), however it has put REL in the position of having no leverage so I am not expecting a good bid. I think if a major takes them over, they have a better chance of getting a price closer to NAV. Re the volume trading when the houses started dumping REL on the false rumour that the bank called the loan - volume was such that there's still a lot a s/h out there that bought over $10.00. Lots of people going to take a hit.
Like they say, the market knows. But if you look at the volume of trades that brought the price below $4.00, it's not substantial IMO. Now that the stock is not marginable, it may increase selling pressure.
I would say that anything under $3.00 is a buy, if you don't mind waiting a bit. Deadlines for negotiations keep gettting extended, however for a friendly deal the total time that has passed so far in the realm of acquisitions is not that long. However, this is obviously not an Amber.
Regards, t. |
