I am back. So is SGH, page-132

"A good deal is where both parties come out happy".............

...........the opposite is in fact true, SWC. One side usually thinks it hasn't been paid enough and the other thinks it has paid too much. This means the 'deal' is likely to be about right.

Not too sure what this says about your understanding of how business works.

Buyers of SGH's debt at 25 cents on the dollar (a bit more for those who bought earlier) hold all the aces, assuming they can coordinate their positions. Whilst moving forward as a going concern with a manageable amount of debt would probably be the preferred route (working capital facilities would need to be found and not all debt need be converted to equity) they'd make a decent return on what they paid for the debt in a break-up out of administration, receiving the proceeds of realisation of assets before other creditors and last of all shareholders - everything up to the face value of loans they acquired. Receivables alone at half year end were $475k and WIP a further $550k.

SGH's directors, who have served shareholders so well these past 2 years and probably in reality before that will be negotiating hard on their behalf and will eventually (I guess) either recommend shareholders accept what's on the table, or not. I'm assuming 75% will have to vote in favour of the proposals for the proposed new capital structure, but I don't know if Oz company law is the same as the UK. If 25%+ of shareholders vote against, they'd end up with nothing. Or at least that's how it looks to me.

Shareholders are reliant on the generosity of hedge funds (or maybe secondary lenders and vulture funds) from now on - unless there's been a dramatic turnaround in trading performance since we last heard . The only ones who really need to be incentivised with equity are employees - and they can be rewarded on future performance.

I'm not anti shareholders doing well - many deserve to for their loyalty or simply because they deserve a break. I may be way out in my thinking and hope I am, but the circumstances have some similarity to a big reversal I and many other shareholders suffered towards the back end of last year in a UK oilco called Xcite Energy (XEL). More than 25% of shareholders would have called bond holders bluff with their derisory offer that existing shareholders should retain 1.5% and they would get 98.5%. The bond holders got to know this, the meeting didn't go ahead and they put the company into liquidation instead. Shareholders got nothing.

Maybe this will be different. Hope so for everyone's sake.