How to be a Millionaire?, page-48

"What I'd like is more clarity about the comment on dividends (I'm assuming we won't get this)"..........

....tim, I don't think much more clarity is needed. The attitude of the syndicate of bankers is perfectly undertstandable in the circumstances: "the owners of the business are in this with us and they're not going to get their money back before we know we're going to, least of all with them getting most of the benefits of the upside".

In practice, as soon as it's clear SGH has been something close to: "fully repaired" (this may take some time) the banks will probably take a somewhat different view of the overall situation and may be amenable to relaxing some of more onerous terms of lending. No doubt Bryce Houghton (who I wouldn't be surprised to see become CEO if he manages to see SGH safely through these troubled times) will be hoping the next time he goes to talk seriously to the syndicate, the boot will be on the other foot and it's the syndicate that will be 'keen to please', with SGH generating sizeable amounts of cash and borrowings reducing steadily. It might suit Westpac et al for dividends to resume earlier than anticipated if it's all being paid down a bit too quickly t0 banks that make their money from fees and interest on lending large amounts of money to 'safe' customers.

SGH is emerging (hopefully) from a short period when no-one felt safe and many feared disaster, for all sorts of reasons it will only be possible to see were justifiable at some later tim,e when the necessary information emerges. What is clear to me is that there was a very clear attempt to crash SGH, by those who make a living out of seeking to destroy the value of companies using whatever means they can, regardless of the truth and regardless of the consequences.

The above is a process that is made easy for them by governments that don't actually want to see proper regulation of the markets because they see individuals' capital and pernsion savings as a big cash cow. Amounts committed to the markets by individuals (much of it 'invested' by pension funds they have trusted their savings in) amounts to trillions of pounds/dollars and couldn't otherwise be taxed if it wasn't done so indirectly, by letting marauding investment banks and hedge funds with operations in the jurasdiction take capital out of the markets, which those organisations then report as profits and governments tax. And it gets better for governments, because they also get to tax the vastly overpaid employees of these gutter operators - much of it at higher rates. In 2010 (I think - it might have been a year either way) over 8000 "City" workers (that's a good one) in London were paid bonuses of £1m or more. Where does anyone think all this came from?

Be under no illusions - the markets are shark-infested waters and you have to be alert and patient if you want to make longer term gains as an investor today. Make up your mind about individual companies you invest in, based only on the fundamentals, your trust in management and back your judgement on the likely longer term outcome. All individuals make mistakes - try to segregate the inexperienced from the incompetent or dishonest - it isn't always easy.

Assuming H2 shows SGH heading in the right direction and with BH a strong force as CFO (which I hope he is - his track record is good and he knew he wasn't taking on something easy) I intend to withdraw from the debate and look again at my investment in SGH in 2 or 3 years time. Hopefully the shares will be sitting somewhere higher than 48c. If not? My fault for getting it wrong. The directors and staff will have lost a hell of a lot more though, so I trust them to be working hard in the meantime on my behalf.

GLAL