If the company folds the employees get first crack at the WIP and debtors - not the banks. The accrued employee entitlement costs would make an impact as well as payment in lieu of notice and redundancy (which aren't on balance sheet whilst a going concern). Wouldn't make sense for banks to do this.
I don't see the likes of Anchorage hanging around for P&I payments to make their money. They are interested not only in return but the ROI associated with the return (i.e. how quickly they earn the return) as both have a significant impact on how they are remunerated by their investors.
I suspect they will not be able to repay the facilities within the existing loan terms and will be unable to refinance the face value of the debt prior to maturity. That is when a debt for equity swap, if it is to happen, would occur.
IMHO all financial results will do in the medium term prior to debt maturity is determine the extent to which equity is to be diluted (i.e. how much debt can be repaid before that time).
SGH Price at posting:
31.5¢ Sentiment: None Disclosure: Not Held
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