We're not buying and selling crayons. You forgot about the Denominator and also that much talked about topic called "Marking to market".
So let's try again with a more lively example.
60% LVR
5 properties properties each worth 1 million (book value) Assets = $5,000,000 Debt facilities of $3,000,000 Therefore LVR = 60%. (3m/5m = 0.6)
Now sell one of those 1 million dollar properties for $800,000 and let's see what happens.
Assets = $4,200,000 (5m less 800k)
Reduce liabilities by the proceeds Liabilities = $2,200,000
LVR = 52.38% (i.e. it is reduced but this is where your crayons snapped)
Now re-value the rest of your portfolio of assets by dropping them all by 20% because you just sold one the same or similar for 20% less then you have:
Assets $3,400,000 (5m less 800k less 200k x 4 for marking to market)
Liabilies = $2,200,000
LVR = 64.70% (i.e. it goes up NOT down)
This is how you get companies with "negative equity like BNB. Now you see why the stall tactics and co-operation from the banks despite a lack of asset sales....
CER Price at posting:
8.4¢ Sentiment: None Disclosure: Held