I can't agree Bikeguy. $1.80 to $2.20 is far too high for: (1) the amount of risk being taken with respect to ensuring farmers stay on and the level of debt; (2) the value of the assets given poor operational performance of Synlait in recent years. This is a company that is operating cashflow negative and negative NPAT.
The real risk is that the assets are massively overvalued on the balance sheet given we don't know the exact level of underutilisation - compounded if farmers leave.
I think minimoke's analysis is fair, assuming that they don't want to let Synlait default. Also, $130m is just the debt due now, there is more of that in addition to bond holders.
Otherwise, acquire the assets directly from the receivers and leave the bondholders with nothing. I'm not sure how many other buyers there would be for Synlait other than Bright and A2M.
Only the farmers and the banks need to be kept happy.
I can't agree Bikeguy. $1.80 to $2.20 is far too high for: (1)...
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