asset sales to reduce leverage, page-10

Sarc,

With respect, get real.

What also decreased with the gearing? The ASSETS.

We're not buying and selling crayons. You forgot about the Denominator and also that much talked about topic called "Marking to market".

So let's try again with a more lively example.

60% LVR

5 properties properties each worth 1 million (book value)
Assets = $5,000,000
Debt facilities of $3,000,000
Therefore LVR = 60%. (3m/5m = 0.6)

Now sell one of those 1 million dollar properties for $800,000 and let's see what happens.

Assets = $4,200,000 (5m less 800k)

Reduce liabilities by the proceeds
Liabilities = $2,200,000

LVR = 52.38% (i.e. it is reduced but this is where your crayons snapped)

Now re-value the rest of your portfolio of assets by dropping them all by 20% because you just sold one the same or similar for 20% less then you have:

Assets $3,400,000 (5m less 800k less 200k x 4 for marking to market)

Liabilies = $2,200,000

LVR = 64.70% (i.e. it goes up NOT down)

This is how you get companies with "negative equity like BNB. Now you see why the stall tactics and co-operation from the banks despite a lack of asset sales....