Yes, the Aurora Absolute Return Fund (ASX:ABW) has 16,841,416 units at NTA $0.9475 = $15.96M
ABW invests in the Aurora Fortitude Absolute Return Fund (Master Fund), which appears to have had a value of about $80-$87M, of which 8.03% was invested in AZZG. So it appears as though all the UBS Nominee notes of 3.2M or 13.62% belong to AFARF.
In terms of whether or not AFARF will be able to recoup anything, my opinion (which should not be relied on) is that:
The total value of the notes that is $47.5M of which $23M have been redeemed and due on 31 March 2016.
AZZ is likely to be running out of cash as it churns through about $2.4M cash per quarter, and had $1.4M as at 31 December 2015. (However $1.1M of the $2.4M cash burn relates to interest on convertible notes).
AZZ didn't have any other debt as at 31 December 2015 that was disclosed.
So in order for noteholders to be repaid AZZ would only need to sell its assets for US$35M (AUD$50M) which seems quite likely given they were offered US$250M... You would imagine that even under a fire sale, it's assets should realise enough to payback the notes even after paying off the costs of administrators. The enterprise value to reserve metrics also indicate that a sale of over US$35M is warranted.
I believe the appointment of the investigative accountant is to ascertain the value of the AZZ's assets so that the Trustee of the Notes can determine whether or not to push for liquidation.
The equation is simple:
1. If the value of the assets would likely result in a value of over $0.66 per share (3-1 conversion) (ie circa US$150M) then it is in the Trustee's interest to delay liquidation in favor of the sale as it would return noteholders more than $2.00 per note.
2. If the value of the assets is less than US$150M, but more than US$35M then it is indifferent if liquidation begins as the noteholders will get paid out regardless of whether it is a distressed asset sale or not.
3. If the value of the assets is less than US$35M, then the Trustee would likely negotiate some form of extension as it would be in their best interest to delay the liquidation and hope for a recovery in the value of the assets (though AZZ would also require funding to be able to continue operating).
It is highly likely that we are looking at scenario 2, so my guess is that noteholders and AFARF are okay. Not so sure about shareholders though.
Even if there is a sale for over $150M, noteholders own us come 31st March and could negotiate very favourable extension terms or threat liquidation (unless AZZ comes up with alternative funding to repay noteholders)
We are coming to the business end of this - not long now till all is revealed.
Interesting times ahead
AZZ Price at posting:
50.0¢ Sentiment: None Disclosure: Held
