ZEN (ASX) Ann: Trading Halt

Originally posted by danhoff: ↑

Let me guess at the upcoming announcement

1. GCY will continue to trade and therefore consume the electricity in the PPA for the near term at least
2. ZEN is an outstanding creditor and is owed 'x', and expects it will be paid 'x'
3. If GCY is restructured, and continues operation, there will be no impact to ZEN earnings and EBITDA
4. If GCY does not survive, there will be a hit to earnings of in 2020 (next year) of 4 mill earnings and 2.5 mill EBITDA
5. If GCY does not survive, there will be a hit / provision to this year earnings of ?????? (this depends on if GCY was paying its monthly bill! so far!)
6. The loss of the 15mw is unfortunate, but will be outweighed by new contracts
7. The plant and equipment can be deployed to new contracts, minimising the captial loss

But.............. overall, this will tell a lot about the contracts ZEN have in place with other clients; how safe and moated are the contracts; is there any insurance or clauses re the capital outlay; was it CAPEX or lease for GCY

Obviously the GCY announcement is bad news; how bad... ha, ha. No one knows. If someone buys GCY and keeps the operation going (the current 'plan', the administrators say), then there is NO HIT to ZEN

So there is a 'big hit' or a 'no hit' or something in between.

I am glad ZEN paused to announce.

I will also 'wonder' if the 2nd half of the cap raise will go ahead. Maybe he directors dont want 1.75 mill of shares at 58 cents anymore. Maybe the guys that agreed to pour in 25 mill at 58 cents are now sad? Maybe the SPP ($5 mill at 58 cents to retail punters will not be well subscribed)

Maybe ZEN will announce some new contract (from the 400 mgw pipeline) to calm the waters.

Geez, who woulda thunk at $1900 oz gold, that a gold miner could go broke!

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I agree with this analysis. This will be a good test of ZEN's credit position with customers. If the customer is a going concern its business as usual. If they're put into liquidation what is the recovery value? Irrespective of the GCY outcome, this could provide telling insight into the quality of ZEN's book (either good or bad).