.Having performed corporate gymnastics for two years with only a slightly larger stake in PEXA, a busted-looking scheme implementation deed and some bruises to show for it, analysts are now running the numbers on Link’s balance sheet.
While Link argues the fine is quarantined within LFS and has no recourse back to the group, the reality is that the business has other extensive business under the regulator’s watch and not everyone thinks it’s practical and/or responsible to walk away from such a potentially large sum.
Analysts are now having to look past Dye & Durham, and thinking about what a payment of that size could mean for Link.
Morgan Stanley’s team chimed into the debate on Wednesday, saying the combined payments of up to $605 million were likely non-tax deductible based on prior FCA fines, and may spell a capital raising or asset sales for Link
.“We estimate LNK may need A$300-600m of new equity to support its balance sheet,” the analysts told clients.“Alternatively, LNK could sell assets.” They pointed out a 20 per cent stake in PEXA could net $190 million, post tax.
LNK Price at posting:
$3.31 Sentiment: None Disclosure: Held
