My view on halt, page-7

Going back to basics:
1). Last week the Q2 operational report was released early (ie: before month's end instead of at month's end).

2). The operational commentary alerted last week to the likely underwriting of any possible shortfall in the take up of the loyalty options.

3). The language of last week strongly suggested that the loyalty options were a certainty (whether directly or via underwriting of any shortfall).

4). There was no suggestion of any problem. Still isn't. To the contrary, settlement of CDC is progressing with the various COs progressively being satisfied. The timing to settlement from last week was "within 14 days".

5). The loyalty options are not due to expire until 31/3/16 so there is still 8 weeks to go.

6). The Interim results are not yet due.

7). Nothing therefore seems to be warranting a trading halt, at this particular time, on the basis of the disclosed information (i.e.: the market is already acting on an informed basis).

With the loyalty options not yet nearing expiry, nor capable of being traded on market, the ability for there to be a distorted, influenced or uninformed market doesn't exist. That is, those with the options still have to 31/3/16 in which to exercise, free of influence or interference from external sources.

Given this, the reasons then for the trading halt do not entirely relate to the possible underwriting of any options shortfall. In any event, this would not usually trigger a trading halt.

So, it is something in addition to any possible underwriting position which supports the other comments of last week, namely that AHF have been approached by several institutions /investors to underwrite or support the options raising.

Translated, this suggests that AHF may well have lined up several new major investors (either solely to underwrite the shortfall, if any, or to take up a major placement as well as underwriting any shortfall position). On the basis of last week's commentary observations, this may indeed make some sense.

If this is even remotely correct, it means that AHF is about to raise some significant funds to progress its acquisition program recognising that they are also not yet at peak /critical production mass.

Now, if this is the case, then it also suggests that new acquisitions are about to be announced. Remember, from last week's commentary, gearing post CDC is expected to be circa 26% (if memory serves correctly) which, post settlement should take bank debt to about $9m (peak). But, if this is so, then the numbers don't quite add up.

For example, Dec31 cash + those options already exercised, comes to about $3m. The remaining loyalty options are expected to raise $3.7m. A deposit of $1m has already been paid. Bank debt at Dec31 stood at $762K against a $5m facility.

Added together, these figures come to $3m + $3.75m + $4.25m = $11m against a net funding requirement of $10m (after allowing for the $1m deposit already paid).

Gearing, in this instance, would be significantly < than 26%. More likely, closer to 17%.

Considering this and looking back on the Q1 and Q2 quarterlies, the suggested position is this:

1). Since Jun30, $11.15m has been spent on investing activities.

2). Of this, we know of the Brucknell 4 settlement for $2m (property + biological assets) and the Heywood 1 settlement for $5.6m (property + biological + in season, due Jan16). Deposits however were also paid on each of these with at least Brucknell 4 dating back to F15 (circa $200K). So, net known used funds of $7.4m plus a further $1m deposit already paid on CDC. This however still leaves $2.75m used in other activities.

3). Some of the net remaining investing flows will also Have since been used for capital works' purposes but not necessarily all.

4). The capital works advised in last week's commentary may well have come to $1m - $1.75m, but little more which leaves at least $1m left over.

5). Based on $1m being left over, and gearing of 26% (post options exercise and post CDC settlement), this suggests available funding reserves of $5m+ going forward.

6). If so, then This suggests that the $1m extra investing flows from Q2 may well have been invested in another new asset. Whether this is further capital works, an adjoining farm to Heywood 1, or something new again, remains to be seen.

This is all hypothetical but it suggests (as indeed the trading halt suggests) that something more than just the underwriting of the loyalty options is about to be announced.

That's my current interpretation based in the main on the unexplained extra investing outflows during Q2, the trading halt now in place and that post settlement gearing will be higher in percentage terms than the figures otherwise seem to be suggesting. Thursday however will show what exactly it is that brought about the trading halt today. Time will therefore tell on this.