Dilution at this price, page-30

Joe, we know nothing because there is no transparency. There has been no transparency because guidance is difficult amidst restructure (and prob policy change from CA). We know that things were bad. We know that an effort is being made to reverse. We don't know how well the reversal has done and probably won't until 17 numbers come out. At best the coming numbers will point in a general direction.

I dont know anything about the amendments as does everyone else so we cannot tell if it was good bad or indifferent. It may be the case that it has allowed more breathing room for Sgh. Doc has mentioned semi annual amortisation, perhaps something of this nature may have been relaxed on the evidence of nihl appearing on the radar all be it later than has been expected by the banks. No idea, speculation only on my part.

I do expect some more one off costs with restructure.

Also Mel, I do believe the adoption of aasb was good as it will close the gap between WIP and cash flow. I believe WIP was way off what actual cash was coming in. It was lost upon the market because of all the acquisition activity but now the cash flow has nowhere to hide. I think the banks were more interested in WIP than cash flow hence the situation. The new aasb may allow cash flow to look better than WIP. It's always hard to tell when WIP can accrue over long periods of time. If WIP could be divided into q, h or y of expected conversion to cash, that would tell the whole story.

Lastly, I do believe that IF there is a dilution, it would only take place at last comfortable minute before May 18. I think the ground work is being laid to hedge against default at maturity but with the breathing space to allow SGH to covert as much nihl and WIP as possible before dilution if required. I do believe the banks would have partly encouraged d4e or the like as a show of seriousness of last chance to pay the debt. Surely they know that a conversion of equity to lower debt de-risks the company which re rates it. How much it re rates? Depends on amount of dilution.

That is why I ask the question.... if you bought today and sgh shareholders faced dilution down the track, would today buyer still be in front? Interesting question. All speculation on my part.