it's a good buy on a long term as d co. is d sole maker n supplier of bags to flour mills plc n UNICEM(flour mills' new cement co. of very high capacity that is due 4 completn by 2008), though d prospectus says that 75% of d proceeds will b used 2 service debt 4 completn by 2008).d co. is wholly owned by flour mills n d offer is underwritten 80% by zenith bank.that gives u some confidence.
the fact that any offer is 80% underwritten by any business entity is not supposed to give u any confidence!!! it is just a regulatory requirement by SEC & NSE gor all offers in nigeria.
the only implication of the under-writing is that bagco is sure of getting that 80% of the amount they are asking for even if no single person buys the shares.
the fact that zenith is underwriting is not also an implication that Jim Ovia thinks bagco is a business he wants to get involved with, it is just a subsidiary of the zenith group doing their own business and i can assure you, they have negotiated their reward for putting the zenith name on that offer!!!
so if u base your decision to buy on the 80% underwriting, you are off by a very long shot if the fundamentals are wrong
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