Ann: Unconditional Contract for Grain Terminal Development, page-2

Midway Ltd (ASX:MWY) Share price $0.715
Market capitalisation $62.4mNet debt / (cash) $9.7m
Excess inventory ($20.0m)Net (cash) due from asset sales ($32.4m)
Enterprise value $19.8mSources: Company reports,
ASX announcements, Bloomberg, Sandon Capital analysis
During 1HFY24, MWY finally delivered its long-awaited grain strategy, announcing that it had agreed to sell 5.15 hectares of its Geelong port site to CHS Broadbent, who will build and operate an 80,000 tonne grain storage and export terminal. The sale price of $15.5m for ~5 hectares (~25% of the total site area) compares favourably to the current book value of $16.5 million for the entire 19 hectare site. In addition to monetising excess land at well above book value, the agreement with CHS Broadbent also helps mitigate the significant cost of the take-or pay agreement for the shiploader owned by Geelong Port. Soon after the grain strategy news, MWY refinanced its banking facilities to be more focused on working capital rather than core debt, which better suits the needs of the business today post the sale of the plantation assets.Whilst the pace of change at MWY has been slower than we would like, significant improvements have taken place at the company over the past two years. Non-core assets have been sold, loss making businesses have been closed and the grain strategy helps defray a punitive take-or-pay contract. The asset backing of the company today (net tangible assets of $1.64 per share) is largely made up of current assets such as cash, inventory and receivables. A significant amount of the inventory balance has been converted to cash in the early part of 2HFY24 due to solid demand for woodchips from customers. This places MWY in a strong position to conduct further capital management initiatives (dividends and/or buybacks) to create value for shareholders using their balance sheet. We also look forward to further updates on the company’s nascent carbon management business.