Forestry investor Rubicon yesterday disclosed plans to buy up to 5 per cent of its stock as it said investors were undervaluing its potential, particularly its biotechnology joint venture ArborGen.
Chief executive Luke Moriarty said Rubicon's shares had been hit by several short-term factors.
These included Sir Ron Brierley's Guinness
Peat Group's sale of a cornerstone 20 per cent stake in the business, fears about the prospects of its 50 per cent forest-processing subsidiary Tenon and general market nervousness.
The shares closed up 3c last night at 90c, but still well off the $1.03 investors paid for GPG's stake in September. "Nothing has occurred to change our fundamental belief that there is considerably more value in Rubicon than is represented by the share price," Moriarty told shareholders at the Rubicon annual meeting in Wellington.
He said ArboGen, the joint venture with International Paper and MeadWestvaco of the US, was potentially worth more than the US$25 million ($36.62 million) estimated by analysts.
He described a scenario where the development of just one of its technologies - eucalyptus trees gentically engineered to improve their processing properties - could create a business generating after tax annual sales of US$38 million.
"When you begin to look at the possibilities more closely you can see that the value potential is actually huge," Moriarty said.
Others have a different view. Sources have suggested GPG sold its Rubicon stake partly because of disagreements over ArborGen, which drains about US$4.5 million from Rubicon's coffers each year.
Rubicon's other assets include a troubled forestry joint venture in Argentina, Forestadora Tapebicua, and Horizon2, a forest stock improvement venture with Carter Holt Harvey.
Rubicon chairman Stephen Kasnet said a lack of trading volume was also to blame for the weak price.
