Jim - is the situation not that the nominal value of all former...

Jim - is the situation not that the nominal value of all former shares issued was multiplied by 100, leaving only about 3.7m existing shares in issue. The holders of these owned a whole pile of debt and not much else. These shares now form only 5% of the re-capitalised SGH. Merrill Lynch were 'buyers' of 95/5 x existing shares newly issued under the terms of the recapitalisation. But ML are holders only as nominees (of the former senior lenders - ie AC and others) who are the beneficial owners of the new 95%.

The new owners (fronted by Merrill Lynch) decided how much the new shares would be issued for by cancelling a given amount of debt. It was simply about accounting entries and legal agreements to reflect them. Had less debt been cancelled, the cost of the shares (to ML as nominees) would have been lower and vice versa.

The market, for some strange reason, seems to be sticking with the present price as if there is some kind of logic to it, which there isn't except to the extent it's what people can buy or sell shares at. Now that SGH is no longer insolvent, the best way to value the Company is via DCF projections to arrive at NPV. Then divide this by the new number of shares in issue to get to a fair value per share. There are two discounting factors to take into account, however, the first to recognise the eroding future value of money and the second to reflect risk.

To me, the latter is infinite, the over-riding risk being that the 95% will want to ditch the rest, either before or after taking the company private. Not sure how compulsory offers work in AU but you can bet your bottom dollar AC will get whatever it wants, whether or not it seems fair.

Life's like that.

The alternative is that AC and the other 'vultures' are cuddly teddies and that SWC was right when he stated about a hundred times they were only ever protecting stakeholders (by inference people like him). Where is he btw? What are scholars saying about all this?

jmo/dyor