thoughts on financial strategy, page-9

Top quality post, as we've become accustomed to receiving, HT1.

The other big unknown is provisioning by OZL for an adverse finding re the shareholder class actions. No doubt it will remain strictly confidential but surely they will have a range from, say, zero to $X million at this stage.

The sharemarket has priced this in. It's the difference between the current $5.441 billion capitalisation and what OZL would be worth with no class actions pending. We don't know the latter valuation of course..... but we can estimate it.

e.g. if we think OZL(clear of any litigation threat) would currently attract a $2 share price then the market is expecting a litigation liability of just over $1 billion. In the simplest of terms it's suggesting the current share price could be about 20% higher. That's a billion plus onto the market cap. If we think the current share price(litigation clear) should be $1.80 then the inherent litigation estimate is around $400 million. These are big bikkies in any context.

I'm not suggesting either of the above figures but the analysis shows how the current uncertainty may be clouding investor perceptions. Do we really know if OZL will be fully or partially liable, if insurance will offset any of the potential liability, how long the whole damn saga may drag on for.... etc. etc.

What I am saying is that there is a big grey cloud hanging over the excess cash holdings. We have very little idea how dark that cloud may get before we see clear blue skies all across the OZL horizon. Until the situation becomes a lot clearer then prudent financial management remains of paramount importance.