- the breach of debt covenants puts ANG into the red zone. A capital raising has to occur, imo. There's no getting around it. Debt is simply far too high, even if there is an improvement in fy15 earnings. - Will Bradken bail? Corporates are conservative and Bradken will want to monetise its shareholding. This could create a huge share overhang. - ANG is still way overvalued, even if there is a recovery in earnings. It is worth 95c tops. Here's the math: mid-cycle earnings are $34m Ebitda (average of $51m peak cycle and $18m bottom of the cycle). Apply 5x Ebitda to $34m and you get an enterprise value of $165m. Deduct net debt of $70m ( could be a lot higher) and that's a market cap of $95m. That's roughly 95c/shr. At $1.20, shareholders are carrying too much risk without adequate compensation. - Don't believe talk of a strong rebound in fy15. Major customers might restart orders but they will do so at much reduced prices. I'm hearing that Rio Tinto is forcing 25-40% price cuts on mining service companies. That's the bargaining power that a $50b resource giant has. It's simply a fact of life.
ANG Price at posting:
$1.21 Sentiment: Sell Disclosure: Not Held
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