Our shares were valued at $8+ just two years ago with a huge debt but also with strong earning expectations. We share holders have now been offered something like 4-5% of the firm in exchange for most of the debt.
I have run some numbers on how we may look in five years. Bearing in mind that Achorage (our new lender) have shown in the past that they can turn around a company in trouble.
Below in the first column I have plucked in random share prices (in 5 years time) based on today's number of shares and then calculated the share price based on the proposed dilution (I have used a 95% dilution in this example as we don't know how the warrants are going to work out).
$0.00 = $0.00 with dilution (that is if everything fails)
$1.00 = $0.05 with dilution
$2.00 = $0.10 with dilution
$3.00 = $0.15 with dilution (Steve worked out this share price based on $800mil revenue and 15% net profit but that was when we still had the large debt)
$4.00 = $0.20 with dilution
$5.00 = $0.25 with dilution
$6.00 = $0.30 with dilution
$7.00 = $0.35 with dilution
$8.00 = $0.40 with dilution (this is the key target for me. Mr Market said we where worth $8+ 2 years ago. Will we be able to get back to this figure in 5 years time with almost no debt and with dividends back on track?)
$10.00 = $0.50 with dilution
$15.00 = $0.75 with dilution
$20.00 = $1.00 with dilution.
The most I can loose if I bought a share for today's price is $0.081.
I estimate that in five years time SGH would be well and truly back on their feet and that is when competitive advantage and economies of scale add to their performance capabilities.
So conservatively I am locking in a share price of $8.00 ($0.40 with 5% dilution) in five years time. It is well within reach and could be exceeded significantly.
It is also very important to remember that with almost no debt the risk of the SGH share is also significantly reduced.
The above does NOT mean I will vote for the proposal.
All in my opinion.
My shares have been packed away and will not be sold.
A timely warning to new investors on this site. Do not in general believe posters on this forum. They are not your friends. They have one interest and that is the interest of their own (not you). They may even work for others to force down the share price and scare investors off their shares and keep new investors out.
