ballbreaker here is some more informatio for you:The spate of...

ballbreaker here is some more informatio for you
:

The spate of capital raisings over the past few months fuelled a surge in BLY’s share price, with speculation mounting of a forthcoming recapitalisation deal needed to address debt issues. Shares quadrupled from February lows as market sentiment improved and a capital raising was mooted.



Impact

We maintain our Avoid recommendation and Speculative Business risk rating despite the price hike and recapitalisation possibility.

Only a large capital issue backed by significant asset divestments remains a realistic solution for ensuring survival. Any capital raising will need to be done at a significant discount - anywhere between 30-50% - given the large price volatility. BLY will need to undertake a 1-for-1 or even 2-for-1 equity issue to address its debt issue.

On our FY10 numbers, a recapitalised BLY with minimal debt, valued on an EBITDA multiple of 5-6x, could imply an A$ share price of around 20-30cps at best. This takes into consideration a re-rated cost base from recent restructuring and further debt repayment over the next year as guided by management.

Our FY09 and FY10 estimates are based on management guidance and overall industry conditions. Currency and commodity prices remain very volatile, further complicating any effort to predict BLY’s future.