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03/03/17
08:04
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Originally posted by elit
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Jim I think this is where a lot of people are misled as more optimal capital structure is just not replacing all debt with equity. But rather:
- Reducing debt by replacing some debt with equity
- Reducing some debt by orderly asset sales (which part of proceeds Slaters would be able to retain for short term working capital purposes)
- Agreeing and extending maturity for remaining but much lower levels of remaining debt (most critical part of this imo and where banks have failed to date by leaving this hanging for so long - dumb bankers - dumb dumb dumb - and if SGH fails NAB and Westpac will have serious reputational consequences/repercussions from this - particularly at Government levels for letting a major law firm and brand like SGH fail and this is bigger risk they also face but not getting to negotiation table).
That is where people have lost sight of the potential opportunity here but nothing is certain as we are dealing with dumb bankers and a Slaters executive who did the Quindell acquisition so lot of risks involved trusting those who have got SGH into this mess and not got it out sooner.
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I would think a part D4E and part debt paid from asset sales makes more sense. The article says 100% equity however. Whether it is part D4E or 100% the question is whether shareholders will be diluted and by how much.