cap cap cap, page-78

On 14/12/11 IOH announced that they would spend $10M buying back shares. On the 14/12/11 IOH's SP was $1.33, today with IOH still buying back shares, the SP for IOH is $1.70. IOH's SP hasn't galloped away and it has been a vote of confidence by IOH's management in the stock itself.

What if BCI management announced that they would use $50M to buy back shares? Unfortunately the only snag would be that the top 20 own over 80% of the stock. So it's not as though BCI is all that liquid, and I actually don't think that there's $50M worth of shares that could be brought back for an average price of $3.30. But there maybe $50M worth of shares that could be brought back for an average of $3.60, with the price peaking at around $4.00. That would buy back 13.9M shares, lowering the shares on issue to a nic above 90M. The bonus would obviously be that if BCI management were planning on using BCI shares as currency in any possible M&A, you're getting a better bang for your buck.

My hunch is that it won't happen though. I'd say that if BCI has a cash balance close to $100M by the end of 2012FY, that BCI wouldn't need to offer scrip for any M&A. So it's not as though management needs a high SP. And any shortfall would be taken care of through a bank loan anyway (As suggested by MY).

This is also all on the basis that BCI management desire the SP to go up!

PS. If Kevin Rudd gets up on Monday, my hunch is Malcolm Turnbull will shift his support over to Rudd!

PPS. Anyone who tries to take BCI needs 90% of the issued shares. It's therefore interesting that HengHou appears to have peaked at around 9.9% after excercising their options. A reminder, the percentage required to forceably take holders shares is lower than 90% from memory.