This is in NZD but the story is the same no matter what currency...

This is in NZD but the story is the same no matter what currency you use.

I am a fan of GPG as an asset play. Sure they have pension liability concerns and a stock price that keeps on declining, but the cash on the books more than compensates an investor when purchasing.

Currently there is +$900m (NZD) in cash on their books. Now let’s take a conservative estimate of the potential payment they might make due to their pension liabilities and say this is going to be $500m (NZD), thus leaving them with $400M (NZD) or $0.28 per share (NZD). If we subtract this from the current price of $0.45 (NZD) this means one gets to buy the underlying business, Coats, for only $0.17 (NZD) per share. Meaning one is buying a business at only 4x the cashflow generated from operations in the 14FY.

To me this seems like a no brainer. The stock is currently depressed because of limited ability to estimate when this pension issue is going to be done and dusted. However, as a result investors are missing out on a bargain for a company that has been operating for many years and has customers such as Gap, Levi Strauss jeans, Adidas, Marks and Spencer, Nike and Abercrombie & Fitch. I do not have a great deal of confidence in the current board setup or executive team, but Coasts seems like a business an idiot could run.