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16/05/17
15:02
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Originally posted by Ausbert
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You asked “Are you sure you are talking about the same argument(s)? “
My response: Non-holders were questioning the ability of the firm to continue as a going concern. Now, the restructuring is done and funding is in place for 3-year period, their arguments of company survival is in danger has no base.
You asked “Out of interest, which one of those do you think will occur first? Will the distressed debt managers postpone their DFE conversion date to give long term suffering shareholders more time to realise some potential benefits from any successful claim? How would this serve their needs? ”
My response: I believe some form of restructuring will come first, but I do not believe that would be a purely D4E. Even if D4E occurs, that will happen at a much higher rate than the bears are alluding to ( 1C-5c). I am of the opinion that a part of the loan will be forgiven, a part of the loan will be converted into equity, and the balance will be given an extended period to pay back, probably at a higher interest rate. Funds are in a position do these because they paid only $220 million to purchase the original debt of $730million. They are not doing these out of generosity, but to show that they are turn-around specialists and are capable of coming up with win-win strategies regardless of the how distressed the situation is.
You asked “What is the main target and secondary goals ? ”
My response: Main goal of the fraud case is to secure the escrow money and some of the cash WTG has at the moment. As malmanu posted yesterday, WTG currently has £50 million escrow money and £78 million cash in hand. Even if we get £100 million from WTG, that is approximately A$200 million. Do not forget that SGH current MC is only A$38million and I do not need to elaborate possible impact on the share price from such a cash injection ( remember that as of now, the earliest repayment is due in May 2018, so that whatever money comes in between goes to the company and not to lenders). The other important goal is to weaken MB’s class action case against SGH. If SGH wins the case against WTG, they can prove in the court that business updates were based on the numbers (fraud numbers) provided by the management of WTG.
The secondary goal is to get all the money they claim (£600 million). I am not sure how, but even if a half of it eventuates, that is basically enough to pay off all of existing debt ( I am sure vulture funds will be more than happy to walk away with $600 million for their cost of less than $300million).
To be honest with you, I have never been this confident of my SGH holding. I think stars are aligning well and this is going to repeat the same pattern of SBM, which went from $5 to 7 cents after a bad acquisition and huge debt of $500 million before recovering from 7 cents to $3.96 within 18 months. Yes, let’s wait and see.
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Your own arguments are internally inconsistent. On the one hand you are talk about how strong SGH's position is yet you immediately say that part of the debt will be forgiven and that this will show people that Anchorage are willing to look for win-win outcomes no matter how distressed the debt is
So which is it? Is SGH in a good position or is the debt so distressed that part of it will be forgiven?
Anchorage aren't a charity. They have investors. They have to compete in this space against other funds in order to win more money to manage. They have to perform and get returns that are better than their competitors. If there is value in SGH they will ensure they take a very significant share of it.