i wonder why?, page-2

DD,

Actually I would have been more surprised if their proposal had got up than it been let lapse due to lack of finance.

I can think of a number of reasons that may have contributed to this outcome:

1. They were required to get an expert report whivh would have required a valaution of the outstanding shares. If you refer to one of my earlier post, I calculate that the value per share, using the same methodology used in 2003, was around $3.30 per share. This amount is considerably more than the share prices both before and after the privatisation annoucements. Consequently, a successful full privatisation would have required considerably more funding than the figures quoted in the media;

2. Although manageable, VRL's on and off balance sheet debt is quite high $1.55B. I think the banks would have been reluctant to increase this figure particularly, with the equity of VRL (ords and Prefs) only having a market capitalisation of around $250M;

3. It is my understanding, from reading the media reports from arounf their previous attempt to privatise VRL in 2003, that they were also personally in debt from having acquired their controlling stake. Therefore, they don't have the c capacity to finance the privatisation themselves;

4. I expect they decided that since they cannot finance it all in one go they will continue to what they have done over the last few years and initiate share buyback as finance permits.

Regards

SP