Ann: Australian Case Update - Wivenhoe, page-7

The trial of Wivenhoe, as per IMF's 1HFY17 report, has been set to commence in October 2017. My read of the situation is that, if negotiated settlement fails in August 2017, we will still have the trial in October 2017, meaning the matter should be settled (subject to any appeals) by late 2HFY18.

Regardless of the avenue that's taken, the one thing that IMF really don't want is a loss at trial (or, worse still, loss on appeal given that'd be an even bigger cash flow hit, like Bank Fees case). I look at IMF as a compounding machine which can roughly double every dollar of retained capital every three years or so, assuming they can redeploy (given their target MOIC of 2x and case time of 2.5 years, less 6 months for capital redeployment). I am holding IMF based on where i think they can be in FY20-21, so the difference to me between a Wivenhoe loss (a zero) and, say, $40m on settlement is a big number - if they plan to retain 50% of any Wivenhoe number (say, $20m in my example), then if they redeploy that and make it $20m gross profit (i.e. invest the $20m at 2.0 MOIC) more, capped at an 8x, that's worth 8x * $20m, or $160m enterprise value, which is almost a dollar a share.

At least, that's how i think about it. I'll be buying heavily if/when they got anything out of Wivenhoe, as i think the market will almost certainly undervalue this (although who knows - they could win Wivenhoe and the stock might jump 25%, i'm just speculating). If they lose Wivenhoe, i think they are going to struggle to get to that $123m target deployment for FY18 (they might be a bit squeezed on capital), so i'd start asking myself what the stock is worth in FY20 if they only deploy $100-$110m instead of $120m+.