Ok, I will accept that (I can't check it right now).
So, the only problem you have now is you have a company, SGH UK, with:
Revenue $230m
NTA -$321m. (including debt of $400m)
Where are you going to find some just to take SGH UK over? You are implying that thete us $321m in goodwill. Well, we know how well that worked out for the last buyer. Normalised EBITAW for SGH UK was $33m in FY15 (FY16 was a loss of -$2.6m). So, even if it can get back to a 15% EBITAW (which is very healthy), that is hardly even going to cover the interest on the $400m loan.
In reality, no one will just take over the loan. They will pay the cash to SGH Ltd.
So, I think the issue is, you won't just be able to give the whole thing away. I will explain why I think this is. Say with a EBITAW of $33m, less tax, so say a NPAT of $26m. I think I am being generous with the numbers, but it is more the process that should be looked at.
What P/E valuation?
10% - So, $260m valuation
15% - $390m valuation.
Some might think that a P/E of 15% is very generous. I do. So, the new company takes over all the assets and liabilities, except the $400m loan
So, I would argue somewhere between 260-390 (am not trying to create arguments).
But you say it owes SGH $321m. Well, that is not the buyer problem, just be you have a massive loan.
Most likely case is that SGH are able to sell it off with no net effect on their balance sheet, but a heap of debt has disappeared.
Sorry for all the text and numbers. I hope this is logical and makes some sense. Yes, there are assumptions and holes in this, but generally speaking it is not too far off, in my opinion. Happy to be corrected or questioned.
TL;DR You still can't create something from nothing.
SGH Price at posting:
13.0¢ Sentiment: None Disclosure: Not Held
