29 February, page-38

Grant - You were right about retail finance not getting anywhere near this. I offered it up only as a theoretical option . ( It is just a pity that 20th century, good, ideas for getting retail money into corporates is passe. Maybe one day the value of HYBonds will be more fashionable)
Not a few I know are casting around for yield in what may be a nasty bear mkt .

On corporate bonds however lets agree to differ. One of the things that irritates me is the usual exclusion of PI's in any restructured finance where the finance needed is only for 2-3 years. Maybe I have had too much exposure to private co restructures. The fact that SP now has a forward PE of around 1 does allow for imaginative rejigs in financing. You can nibble away at any bank nervousness with
"patches" some which might be temporary ( 2 years). A 2 year dated redeemable $100m high yield bond , till HL cases through the system, could park the HL issue and ensure $ 200m headroom for 2 years.

Then the creation of a new class of share. Redeemable convertible prefs. in 2017. Start small but make it clear that there is an aim to take this class of shares to $100m over 4 years. I would want a few of those.

On any need for restructure here, you appear to miss the expectation that QPP's PSD will emerge as a swan with Gross profit margins greater than has been the SGH norm .( ...NOT including HL cases which should be treated as a temporary and separate item) .

In 18 months I assume we can stop considering HL because HL will be 95% historic and I certainly assume will leave behind a 9 figure reduction in $'s employed in WIP and chunky 8 figure PAT contribution. Could be wrong and HL cases prove to be a black hole. In that case I would agree that there is a little problem. Seems unlikely.

Then there is your contention that the banks will be so impatient that they wont allow 18 months. Time will tell but if HL cases
are going to plan then the banks probably know that debt reduces by a 9 fig sum in the next 18 months. With EPS expected to rise by a material % to June 16 and debt sliding down , your contention may be wrong.

Mel