* I have a Masters Degree, not a "diploma", diploma's and certificates are awarded to those who do not finish their degrees (ie, you only complete half or 2/3 of the degree). However, i will forgive this error my education is not the point of discusson, SGH is.
The Book value of Debt and Market Cap is only really relevant in the event of recapitalization such as that of a credit raising or dilution whereby the banks take a stake in the firm. Im 90% sure (may be wrong) but as far as i know the debt securities the banks hold are not trading on the open market (they are kept on the banks books) as a result to reflect the principle of the loans would need to be write down in order to reflect the fair value of the loans, this should show up as "Bad and doubtful debts" on their accounting figures, sort of like an impairment or a good will write down.
Its not really cash loss its marely the risk of receiving it back has increased and the appropriate accounting adjustments are made. Whether the banks decide to sell these off to the market, doesnt really affect shareholders.
All we need to worry about is a capital raising, thats my biggest fear at the moment, if the banks are to take a stake in the company and dilute us, i still think thats the most beneficial result. It would significantly reduce our risk of failure and yes we get a smaller portion of the pie but our shares would be marked up.
Example 100mil market cap + 900mil debt = 1billion enteprise value.
Dilution 90%. If you had 10k shares u now have 1k.
Assume shares were worth 30c (for simplicity giving market cap of 100mil).
So at 10k shares you had $3,000
Now due to dilution you only have 1k shares (worth $300 dollars) however...
This is where it gets interesting.
The market cap of firm becomes ""x"" (unknown), solve for x:
Market Cap + Debt = Enteprise Value
"x" + $0mil (debt) = 1billion entprise value.
No debt because banks take equity stake. Enteprise value must remain 1bil.
Hence x = 1billion. Same amount of shares outstanding however they are worth $3 (because firm has no debt)
You have 1k shares. Worth $3,000
No change.
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Last
$50.72 |
Change
0.360(0.71%) |
Mkt cap ! $20.64B | |||
| Open | High | Low | Value | Volume |
| $50.55 | $50.84 | $50.21 | $11.06M | 218.3K |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 1 | 367 | $50.68 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $50.95 | 367 | 1 |
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| Last trade - 16.10pm 15/07/2025 (20 minute delay) ? |
| SGH (ASX) Chart |