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54.5¢ slater & gordon limited

Ann: Suspension from Official Quotation, page-250

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Nikec

2,468 Posts.

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24/02/16

19:15

Post #: 17107473
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Originally posted by Just_a_guy ↑

This is all about covenants. We don't know what they are but I would guess debt/equity is one and therefore writedowns will affect this ratio.

I think the line about trading happening on a basis that is not reasonably informed is rubbish, as there is no more, or less information today than yesterday.
Also they say they intend to report by monday, but they can't report until writedowns are confirmed. Whats the chance this will be finalised in the next 2 days if they haven't been able to do it over the last 2 months? Slim IMO, and to be honest not overly concerned if it takes them an extra few days/weeks to report - in a lot of ways the later the better as they may be able to silver line the writedown with a positive Q3?

SGH clearly aren't happy to write down as much as is being suggested by the auditors. That implies to me that there are likely to be implications of the writedown, otherwise they shouldn't really care too much as it is non cash, and as long as earnings and cash are good by F16, everyone will be happy.

Long term - I'm comfortable and have faith in the business model, due diligence etc, and would personally participate in a cap raising if necessary, but really hope it doesn't come to that.

Anyone with experience of calculating intangibles? if the uk business is 710mil, how low could that value go?

Also assuming westpac have made 'provisions' for SGH, what does that mean for SGH? I would assume westpac would have to make some adjustments to the balance sheet, but doesn't mean they are pulling the plug.

I think it is unlikely SGH have suspended to lock in shorts. Insto's dont like companies suspending without good reason and I would imagine SGH would like insto's back on board.

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Its not debt to equity its cash flow, EBIT and so on.. Debt to equity is usually done on firms which have tangible assets such as mining firms, you can sell those down to pay the loan.

For service firms, the debt covenants are mainly linked to cashflow as service firms have very little tangible assets.

SGH Price at posting: 83.0¢ Sentiment: None Disclosure: Not Held
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