Ann: Campbell Bros. Intends Making Offer for Ammt, page-15

re: Ann: Campbell Bros. Intends Making Offer ... Some holders may sell on-market, to possibly buy bargains from this carnage, but AEC is tightly held by a mainly loyal retail share base, many holders would have held shares for 3 years+ and have seen highs of $5, so $3.35 isnt really enticing.

In regards to the large holders, Milton and Choisel, both LIC's have been on the register for over 5 years and bought a lot of stock above $3.35. If you look up their latest annual reports it is intriuging that they both own shares in company like Ammtec. 99.9% of all their holdings are spread across the ASX200, but mainly the ASX50. Ammtec has a market cap of around $80m and wont be in these index's anytime soon. So both LIC's must rate the business and management highly and wont be letting Ammtec go on the cheap.

Just with a couple of other points:

PSI
AEC management bought another 2.88% during the first half for $1,115m.
$1,115,000 x 100 / 2.88% =$38,715,277 (note 10 in the half yearly). That's the current valuation using the above method and it equates to an EPS of $1.
I wouldn't be surprised if management had spoken to Azure Capital about offloading this asset asap, just to realise some value (CPB have it at zero).

Marc Business:
In its first 4 months it produced a solid result, but then came the GFC. Management indicated three months ago that this business should start to produce pre-GFC results this half.

Dividend:
According to reports the second half dividend will likely be around the 9.5 cent mark. But if CPB can pick up AEC prior to the payment, its around a $3.5m fully franked saving.

Director's Fees:
Totalled $2m, but 3 managers are within this list, great saving for CPB.

Capex:
This year Ammtec will spend $10m on capex to build their new Hydromet lab and finish the refurbishment of No 3. That's 20% of total revenue for the year. Management can see a bright future and are gearing up now to benefit.

PST Valuation.
PST's turnover was $94m with a EBITDA of $10.6m with a profit of $3m, dividend of 2.5c.
Ammtec (forecast) turnover FY10 $52.5m, EBITDA of $12.4m with a profit of $6.3m, divi of 16.5c.
A much better company than PST and at least it has a positive NTA.

Broking Reports.
Fosters Stockbroking have a Net Present Value prior to the bid at $3.16 (they did not factor in a value of PSI, which management believe is at $38m). I think a premium of at least 30% on this plus some sort of value for PSI is a more realistic valuation.

AEC haven't released any communication about the offer and remember CPB did not engage board or management and they are only working from the half yearly figures. I think Rod Smith and the boys would be giving them the grand tour of the facilities, and showing them what the biggest metallurgical laboratory in the world has to offer.

So I believe a revised bid of at least $4.25 would give it some sort of chance with the board. They need this board approval to get AEC, its just that simple. If CPB think sending out the offer document is going to get retail holders to sell, they are wasting their money. The tiny volume that ran through when it was $4.50, 18 months ago is a testament to the holders of this company.

Pep