Positive vs Negative, page-30

I can't say for certain as it is really quite precarious. The ultra low SP is doing no favours and a DFE option is the least preferred of the recapitalisation options (especially, by the NAB). Regardless, even if it is done, there is still the very real risk of rogue trade creditors whose trading terms have already been unilaterally pushed out by SGH. There is also the very real risk of a liquidity crisis particularly if trade creditors start moving to a COD basis. The banks however may end up in having no choice about this. But it's a question of how any final mix ends up.

There will still be sizeable debt in place as there is an insufficient equity spread in place to enable for a meaningful DFE position to be attained. No Bank will do a DFE at a premium to the SP, but they might do it within a 10 - 25% discount of the relevant VWAP.

In order to maintain market liquidity, the "rump" needs to be somewhere between 10-15% (if not more than this). I cannot see it being any more, so arguably, any post resolution landscape will likely be Banks 85 - 90%) : existing shareholders 10 - 15%.

Even so, under current circumstances, this is likely to only see $200M in debt retired whilst for future viability purposes, arguably >/=50% needs to be retired, especially as some new working capital will also be required from a stabilising perspective.

If you were to put the required working capital buffer at $100M, SGH would need to retire $300M in debt in order to achieve a net $200M reduction. To get to the rest then, especially so to ensure that no more than $300 - $400M debt is left in place, there will clearly have to be an intense round of OPEX cuts (this time of a serious nature), coupled with asset sales and non-core activity closures.

So, yes, it might be able to be done and with the banks supporting the process, it should be able to be done, but right here, right now (as per the AFR's comments of today) the biggest single obstacles to reconstructive progress happening is Grech and Skippen themselves, along with other members of the management Praetorian Guard. The longer that this takes therefore, and the more that both Skippen and Grech hold out, the more remote a workable solution becomes.

So, yes, it can happen and it might well happen, but not under the present board /management, especially of, involving or concerning the Praetorian elements. At an absolute minimum, Skippen and Grech must go, but even this might not be enough, depending on how long they both hold out on doing this.