TGA: Time to buy

First a review of the proforma balance sheet:
Assets: $547m
Liabilities $366
Net Assets $181
Shares on issue increased from 161 to 322 million.
NTA drops from $1.07 to $0.56 as a result of the capital raising.
The cost of the class action ($25m) is captured in the proforma balance sheet. (good)

Corporate debt $15m (as at 31 march) against proforma free cash of $17m (after pay out $25m class action).
Corporate debt will be paid down to $12m as part of refinancing.

Securitised warehouse is non-recourse, so effectively going forward TGA will have low gross debt and no net debt.
As part of the securitised refinancing, $12m of TGA receivables will be inserted in return for an additional $11m cash.
So after this adjustment proforma receivables decline $12m but free cash increase $11m to $28m.

It is not clear how much of the $2m in legal costs have been expensed yet to P&L. But it has yet to be paid, so future free cash drops to $26m

Conclusion: A much stronger balance sheet, de-risked especially now that the class action is out of the way.

Underlying businesses:
RR: is a sunset business. It may still have some puff left, but it will NEVER get back to its hey day. Times have changed.
TBF: is a growing business. Its recent performance has been constrained by TGA internal capital restraints.

RR strategy of omnichannelling the business is the correct one. Its good that they are trying to reduce their physical foot print and increase leads generated online. This needs to continue. The benefits are starting to show as shown by decreasing store network opex, increasing online leads.

I will post more as I have time.