How much is it going to cost Bradken to pay the redundancies, long service leave, annual leave and decommissioning costs for the Tasmanian plant they are closing in the new year. that could be another 10 million hit to earnings. By my reckoning they will be lucky to earn 100mill this year, and with a covenant of 3.5times that means maximum debt allowable of 350 mill. It is my understanding that bkn debt is $350-$400 mill which would put them in breach, which means debt gets called in and administration. If they can raise some cash or sell some assets and pay down debt they may survive, but at this point in the resource cycle who would want to buy one of bradkens foundries?? It would be at fire sale prices. I would be very carefull before trying to average down on bkn you could get burnt real bad here if the worst happens.
