village takeover - prefs convert to normal shares, page-8

Sabre:

You wrote:

"it is not recognised in Australia properly for what they are doing...."


IMO the stock price reflects exactly what they have done. Years ago they went to the market to get capital to build the company by issuing among other securities, preference shares. In isssuing these shares they implied that the buyers of these shares would receive a return on their investment called a dividend.

The also implied that the business would be run for the benefit of ALL shareholders not just a select few.

What has happened? From a high of over $6 in 1996 the common has fallen to just over $1. The pref tells the same stort from just under $5 at the same time to 67 cents yesterday. The expansion plans put into place to have a cinema empire has resulted in millions of write-offs (amazing isn't it when Packer bought Hoyts that the exact opposite has happened and the guy made millions and millions on the sale of cinemas whreas Village did the exact opposite - losing millions and millions). AUSTEREO was taken public and after intially rising has also fallen to 44 per share under its NTA and well under its issue price while at the same time paying a dividend that results in Village milking the business for its capital needs and not allowing the company enough capital to expand.

Don't forget that while blowing hundreds of millions of dollars in market cap, they managed to pay themselves extraordinary salaries, bonuses, and options for doing such a good job. The last two years about $24 million each year went to the execs while the ordinary shreholders lost all their dividend income. This year the prefs got to join the party with no income too.

So don't wonder why the price of the shares is selling at about half the NTA ----

As far as the Kirbys are concerned I don't trust them and by the looks of the price of the shares neither does the market.