Yes .... it is going to be fascinating what they come up with...

Yes .... it is going to be fascinating what they come up with .... as I see it there are 3 possibilities.

1) There has been some sort of breach with respect to capital adequacy with respect to the Colignan arrangement and they need to take some action to correct this. Given that there has been no recent update of financial metrics and there is no news on the Arrow Funds website that indicates a breach then I see this as the less likely option. It is worthwhile noting that when the rent was delayed Arrows Funds put out a notice on their website.

2) That they are going to do some form of sale and lease back of one or all of the farms that MRO currently owns with Arrows fund as purchaser. This would have some logic to it and would significantly reduce the level of debt in the company. Even though we know fifth street is officially for sale I think this is probably not the case. In the announcement they mention financer rather than Banks, to my mind that would suggest some form of non bank finance. I can not see why a sale and lease back would need to involve any non bank finance.

3) My money is on MRO buying Colignan from Arrow. From the last Arrow report Colignan is on their books (using a Jun 19 valuation) currently at AUD 13 million and change that has fallen a bit from the last valuation 3 years earlier and you would suspect has fallen again since June.I have not looked in detail but there is probably some more capital expenditure capitalized somewhere so the total market value maybe higher. It also seems to me that Arrow is moving away from Fruit, DVF and nuts towards protein based on their recent acquisitions Firstly it is a ridiculously expensive form of finance well over 11% .... they paid Arrow $2.7 million last year. My guess is an underwritten rights issue for 7 to 10 million and we purchase Colignan with 50% equity. This move would cut the financing cash flow on Colignan from @ 2.5 million to below 500k per year. So this would benefit cash flow to the tune of about @ $ 1.8 to 2 million per year.

Going to be very interesting to see what happens.