guess i should have waited an hour before posting earlier - does that mean labor have a chance at the upcoming election?
on the restructuring, it is worth considering what TPG have given up and what they have received:
TPG acquire: $25m loan receivable from Marion Inc 25% (reducing to 10%) net profit interest in the project
TPG give up: $7m to Marion Inc for working capital $Xm to extinguish former creditors
TPG could well have a different opinion on the value of the project than the former creditors, but they will not be worlds apart. The important piece of information for existing shareholders is how much TPG ended up paying to make former creditors go away, as that will give an indication of the value placed on the net profit interest - unfortunate that we will probably never know
If TPG paid say $30m, that means they see (at least) $12m value in the net profit interest - which would be a good sign for shareholders, as they get (after overheads, directors fees etc) the other 75% of profits
If TPG only had to pay $18m (or less), then they do not see much value, if any, in the net profit interest - this would not be a good sign for shareholders and would mean that even they consider the project to be high risk
the transaction itself is not dilutive for existing shareholders, which is a positive.. yes Marion now have $7m in the bank, but they also own a lower % of the project, so I would still expect the shareprice to drop considerably when it finally relists.. a share consolidation will be needed if the market is tapped again for more working capital (that will be, in my guess, very dilutive)
MAE Price at posting:
0.6¢ Sentiment: None Disclosure: Not Held
