allco debt, page-7

Allco Net Assets Est for 30 Jun 2008


Thanks for Bloomberg article.
However note Allco Announcement 1 May 08 below warns that loss may be “IN EXCESS of $1.5 billion.” (ie possibly more than the $1.5 billion stated in article)


This is my reading of Allco net asset / debt situation.

Figure from half year report for 6 months to 31 Dec 2007 has total liabilities of $6,900M.
Assuming that report to be fair, I estimate net assets at 30 Jun 2008 to be $855M. (some calcs below)

Compare with current market capitalisation of about $180M, makes it, on that basis, a very cheap share.

A positive indication:-
I also hold AXQ (paid about 2x current sp - seemed like a good idea time).
It is subject to a fairly high level of independent scrutiny. Its NTA had been trending down, but the 30 Apr NTA was a recovery from 58c to 64c.
To the extent that this improvement can be taken to be a sign that Allco management decisions have fundamentally been sound, I take it as a good omen. (I hope this is not just wishful thinking).

Notes to above

1) 1 May 2008
Update on senior debt facilities and business restructuring plan


para 4 pg 1 states

This reduces Allco's total outstanding obligations under its senior debt facilities to
$946.5 million.

pare 1 or pg 2 :-

Whilst the Board is continuing to assess the appropriate carrying values of these items, it can
advise that the write-down of goodwill and impairment of the management rights will give rise to a
significant loss. These write-downs and impairments, together with anticipated restructuring costs
and the potential sale of assets at less than carrying values, may result in a loss in excess of $1.5
billion for the company for the year ending 30 June 2008.


2) Half Year report for 6 Months to 31 Dec 2007, dated
Pg 22 Has
Intangible Assets $1,477M
Total Assets $9,308M
Interest bearing loans and borrowings $6,460M
Total Liabilities $6,900M
Net Assets $2,408M

Pg 23 shows Allco holdings in the 3 Rubicon Prp trusts at combined market value of $46M, book value $102M.
Anns dated 11 March 2008 have all Rubicon holdings sold (I understand due to margin calls). I believe this means additional realized loss of about $76M (difference between market and book values).
Add that to total write-down of Intangible Assets gives :-
(Assume other operations are break-even)
Total loss for 6 months of $1,553M
That would leave Net Assets of $855M
Net Debt (less asset sales) of $6,900M
Gearing: Debt V Equity: 8:1

Obviously, gearing should be less if asset sales are at least book value.


Any comments on above, guys? Does anybody have more up to date figures?

I hold AFGHA not AFG