1. T/o ($2.95): receive $0.75 profit (cr $0.75), reinvest $2.20 of original capital (dr $2.20) and earn a similar yield 6-7%. Eg bank stock
2. No t/o: dr $2.20 due to orig purchase receive 6-7% yield.
Under scenario 2 you dont get the $0.75 return. I acknowledge that under scenario 1 you no longer have ski, but in theory you would reinvest in a similar infrastructure/yield blue chip to get similar distributions. But you are better off as youve bank the $0.75. Have to remember that ski has never reached $2.95 so even if you did hold without a t/o it would be unlikely to return that sort of captial.
Under scenario 2 it would take 18 years of current distributions to recover your original purchase price. Maybe in 18yrs ski would be at least $2.95 but we are getting that benefit right now. I run a large superfund with considerable holding in SKI and I cant see the negatives in the t/o. Also depending on the mandate of the consortium members they may decide to refloat the assets as some point to realise their own captial return. This would provide investors with an opp to get back in if it indeed eventuates.
SKI Price at posting:
$2.84 Sentiment: Hold Disclosure: Held
