Ann: More than $11 million secured in accelerated sales program, page-134

Hi Speedie and all,

I'm not sure you're correct about some of the aspects there, but I am happy to be corrected.

My understanding is that the Put Option holder owns the assets, thus why they have the ability to 'put' those assets to QIN. If the Put Option cannot be paid I would think that the holder would still own the assets, thus they would not become an unsecured creditor.

In terms of the Bond holders, I am not sure that they would choose to allow QIN to carry on in anticipation of a single interest payment. They will be well aware of QIN's burn rate and every day that they choose not to wind QIN up (assuming QIN cannot somehow become cashflow positive) will result in less cash in the kitty upon liquidation.

Sometimes, managers of big funds will simply go with the easiest of options.

I disagree with the view that PDN and QIN are not in a similar situation - i.e. both are/ were have negative operating cash flows and/ were at the mercy of their creditors.

I would be very surprised if QIN could undertake a CR that didn't require sign off from the bond holders. Just as what PDN were trying to do before EDF sunk them, the bondholders will want to extract material concessions for their benefit for agreeing to any changes of terms (e.g. debt of equity swap).

I was intimately involved with PGI who had a similar situation where Mac Bank had them over a barrel. Mac Bank were more than accommodating in altering the loan contract ... for massive fees accruing to them - to the point where the lenders ended up being the sole beneficiaries of PGI's operations.

Another aspect is that the Board of Directors of QIN will be very cognisant of their duties and implications if they continue to trade whilst insolvent. We don't have insight to the current numbers/ forecasts but based on the downgrades from Moody's and S&P, the fact that no recapitalisation plan has yet emerged, the fact that no major plantation sales have occurred in June and the fact that one Director has resigned as got to raise some concerns (not that shareholders can do much at this point).

I certainly hope that things work out here for the longs (I too lost some money here), but from experience I don't think this will have a pollyanna ending.

Cheers
John