While I understand where you are coming from, I think you are missing the finer points. I absolutely don't find it "desperate and embarrassing". But, at the same time, the reality is, it is a Hail Mary Pass. I would sue them, sure. But would I expect a positive outcome? hmmm. The New Lenders would have a very very low expectation of the lawsuit against WTG being successful.
Firstly, the New Lenders (Anchorage, et al) know EXACTLY what they are doing. When they purchased the debt they would have had a fair idea (based on their OWN due diligence) as to what had happened. Then they would have reduced that percentage by half or more. So, the current suit between SGH and WTG is not a big thing for the New Lenders. Material, yes. Significant, no.
The business model of SGH is absolutely not broken. In isolation it can do reasonably well as a business. SGH, in its early years (and SHJ) show that a listed legal company can make money and be a reasonable business.
If SGH Australia can do revenue of A$250m, it should be able to do a 10% profit. Ok, it made a loss in FY17 and FY16. But, apparently, it made a profit in FY15. Also remember that the New Lenders (it is not just Anchorage Capital, as a reminder) put in A$40m to SGH for cashflow, then added more on to that a few months later. They would have been 100% across everything within SGH at this stage.
A profit of 10% is great. But, ELEPHANT IN THE ROOM, not when you have an extraordinary amount of debt owing! To a normal, not indebted company, it is very adequate.
Also, remember that Negative Tangible Assets is only because of the New Lenders. They COULD forgive some debt. But, let's be real, they will only forgive some debt when they own 95% of the equity.
SGH Price at posting:
7.0¢ Sentiment: Sell Disclosure: Not Held
