uneconomical, page-68

From a technical perspective, a company which has negative equity and uncertain cash flows is technically insolvent. MAE's financials at 30 June 2008 does not have negative equity. However, they did have significant Net current liabilities, and according to the latest co report still do, because they have only been able to arrange additional finance unil 17 June 2009 (or thereabouts if memory serves). This is why they had to include a "Going Concern note in their AFS which clearly states that their continuation as a going concern depends on ongoing support from their bankers, creditors etc etc.

In the abscence of a sale of assets/co in the next 4 months, their continued solvency beyond 17 June 2009 depends entirely upon being able to refinance their loans, or being able to reach 7.5mmcf/day production. From experience, potential asset sales can take quite a long time to negotiate and finalise. As MAE are seeking buyers as opposed to them being approached by buyers, the potential exists that no buyer is found or alternatively that they would sell their assets without the control premium which they may otherwise have attracted. OZL is a good example of what happens when options start running out- high debt levels, good proepects and a takeover offer below the NPV of future cash flows. If MAE do have some offers which are being negotiated at worthwhile prices, they could use this as leverage to obtain an extension to their finance so this will be a non event.

For the record, I no longer hold this stock because it is beyond the risk profile I am prepared to accept. I am still watching the stock closely for any evelopments which may cause me to alter my view, as I beleive there is some potential to make good money out of the share.


Honestly wishing existing holders well.