AMP 1.40% $1.45 amp limited

uk biz (hhg) worthless ... just as we thought

  1. 5,816 Posts.
    Hmmm.. interesting to see how the truth regarding AMP saga continues to trickle out ... orchestrated by the kings of spin ...

    Two days ago it was quietly ann'd that HHG (AMP'S soon to be demerged UK biz) could require up to $1.69billion additional prop-up due to new 'realistic' solvency provisions required in UK ...

    The recent 600 page report suggested that AMP holders would receive a 1:1 (AMP/HHG) share at demerger and that the HHG shares were thought to trade around $1.45 thus valueing HHG m/cap at $2.17billion.

    Analysts have previously suggested that the UK operations are a basket-case and worthless ... this latest development seems to confirm this view.

    Either way, the truth will come out ...

    UK spin-off may trade below book value: chief
    By Sharon Kemp (the Age)
    October 22, 2003

    The chief of AMP's controversial British operations signalled yesterday that its shares were likely to trade well below the embedded value of £900 million ($A2.17 billion) shown in AMP's demerger documents.

    Roger Yates, chief executive of the operation soon to be named HHG, also defended retention payments to British executives.

    He said the bonuses prevented the poaching of fund managers working for the only HHG asset that would initially generate cash, namely Henderson Global Investors.

    Mr Yates confirmed that the company would attempt to raise more than the minimum of £100 million it must raise from investors before next June to pay off convertible notes issued by UBS, and to buy up to 60 per cent of Henderson from an in-house life insurance fund.

    The proceeds of any additional raising would be spent on buying a greater portion of Henderson rather than topping up capital in HHG.

    Analysts and fund managers feared HHG would need more capital than AMP had forecast because of imminent changes in British regulations defining what could be counted as capital, and HHG's need to recommence contributing to an in-house pension fund from January 1.

    Their concerns have prompted forecasts that HHG shares will trade at discounts of as much as 40 per cent should AMP's British operations separate from the Australian parent.

    Mr Yates said yesterday he was worried that Australians would sell HHG immediately after the demerger when the shares would be trading at a discount.

    AMP shareholders are in line to receive one HHG share for every AMP share. HHG shares would trade at $1.45 each if they traded in line with embedded value.

    Mr Yates said analysts would make their own valuation of the demerged company but, because of changing market, regulatory and accounting requirements, it was not reasonable to provide forecasts for HHG in the demerger documents.

    "In the end, there is a huge amount of information about the various businesses that comprise HHG and, frankly, the fund management business is a very transparent entity," he said. "In the case of life services, the issue is about embedded value as opposed to what profits may be."

    In valuing Henderson, analysts take into account the retention of fund managers, which are the key resource of an asset management business.

    Cheers ... tight stops.

    This is only my view ... read the red stuff.

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