Ann: Trading Halt, page-23

I suspect the heavy clearance sale, where cash was more important than profit, and the huge inventory impairment has led them to breach an earnings covenant.


If one was thinking the worst that bankers (NAB, Bank of New Zealand and HSBC) are going to step in and appoint Administrators/Receivers the theory could be:
• Biggest asset to realise is inventory. Cheapest way to do that during Xmas is let management do it and see where things end up in the new year (as r/ship and VA are very expensive and value destroying processes)
• Cash/overdraft facility should be at its highest/lowest point right now
• Getting as much stock as possible converted to cash and paid into an overdraft facility would most likely defeat trade creditor claims to the sale proceeds of unpaid stock under the Personal Property and Securities Act.

I wouldn't think there would be a buyer for the business in r/ship or VA - only competitors looking to enter a data room and review store leases to identify:
• Potential negotiating position for lease renewals with landlords
• Make approaches to landlords to take over leases in desirable store locations.

Lets see what happens - hopefully for everyone invested it is good news and not bad but I don't like your odds.