'Are you aware of the large write down that has already occured?'
- Further write downs will occur. Look at the income the valuation was based on in purchase, the current cash flow is significantly less and has diminished over two years.
'Star Vegas is imporoving quarter on quarter so it would be interesting if the auditors wanted further write downs.'
- quarter on quarter means nothing when you have had two years of significant diminishing earnings which your whole purchase price was based on.
'The debt was refinanced late last year to much smaller 6 monthly repayments over a further 3 years. I suggest you read that announcement.'
- It was refinanced, that means they can’t afford the loan. They have continuing covenants in place, the purpose of which is their lenders consider they are at risk of default.
'Operating cash flow is positive and likely improving with broader business performance, and there was a considerable cash balance at the half year.'
- The cash balance barely will cover one year of intrest and their earnings are diminishing year on year.
'Share issues required is rubbish. Even in it's current state, DNA's operating cash flow can just about service the refinanced debt repayments.'
- It had to refinance; prima facie it can’t afford the loans.
'And by the way, you realise there was a modest buy back going on earlier this year?'
- Price has continued to decrease on the buy back over the last year. As stated. Company is worth 15% of what it was 5 years ago. You can not argue with this.
'A director and the MD have been purchasing on market, albiet modestly. Hardly a sign the balance sheet needs repairing with a capital raise, goose.'
- The whole board has been intangibled in a clearly terrible purchase and now legal action against each other. No further comment required.
'Another positive catalyst you probably don't know about is the arbitration against the former Star Vegas vendors. As you're probably not aware, significant damages are being pursued for breach of non compete clause in the purchase contract.'
- Well across this. This only goes more to how terrible a business decision it was for any one to who purchase this stock on the basis operating a casino in cambodia was a real money spinner. Legal proceedings in Australia will have no effect in the frontier country in cambodia as to the actual operations of any competing casinos, injunctions cannot be enforced on the actual operations. Only freezing of assets within Australia.
'The Thai vendor directly competed with Star Vegas taking VIP business and decimating the Star's VIP junket business, literally next door. That's more or less what led to the write down. DNA are suing them for USD120m and have even successfully frozen their 18% shareholding in the company.'
- The write down was because the business did not generate any where near the income the valuation it was purchased allowed. Go to this part of the country and see what businesses cost $350m – it was a terrible purchase even before the legal proceedings relating to the sellers.
'The share price is way down because it is tracking the earnings of the business. Which is why after the quarterly update the share price has re-rated to about 25c from about 20c. It will further improve if the quarterly runrate is improving in the full year results.'
- The share price is way down because it’s a shady asset run by a shell company in Hong Kong and the market has no ability to accurately price anything related to it, even before the legal proceedings. The share price is not 'way down'. It is has been diminished to 15% of the market cap of 5 years ago, there is no value here.
'The bottom is in already mate. Institutional shareholders were buying around 20c adding to their positions. This is a further sign there is confidence that the business performance has bottomed, and is now turning around.'
- There are no significant institutional purchasers, the top share holders are the owners of the company, there is little liquidity in this company.
