Bearing Fruits- More Lemon?, page-91

I hear you Nick and agree that in a sense anything is possible, I just can't make a case for fresh capital in any form.

Trying to keep it simple. No matter what the financial arrangement - sell term loan, hybrid, can pay interest but not reduce principleetc. at the end of the day whoever is left holding the risk wants an adequate return on capital.

The year just passed is unique. The company will never see another year like it. Reason? Swallowing such a large chunk of WIP fromnumerous acquistions not just PSD. I say this because there is no situation I can imgine epwhere there is an opertional cash injection coming in two years time. In two years time all businesses are bedded down and predictable (so far as any business can be).

Therefore, to raise enough capital to make a dent in debt and provide a return to those taking on debt or hybrid debt/equity a level of operating cash flow would be required that would of a similar quantum to TNT which would have serviced debt in the first place.

I just see it differently to say a resource or oil exploration company where a funding source can take a risk be use they see a lot if gold. If our pot of gold isn't apparent by end if this FY it never will be. By next August enough time will have passsed fir the majority of purchased WIP to have flushed through the system and we start FY18 in a state that is likely to be the status quo for years ahead.

This is actually my premise for optimism. To produce the cash required to pay interest and pay down debt it is reasonable to assume that level of cash flow will continue in what would then be a mature business will marginal growth and strong cash paying a dividend.

I see it as an all or nothing. I see no middle ground. If it can produce from one-offs e.g NIHL and embedded purchased WIP to get debt down to reasonable level then the risk we took with leverage will have paid off in a big way. After that we settle into a predictable pattern if earnings. If we can't prove (not necessarily do but prove) that by next August then I fail to see his the company can continue in its current form.

No excusing the stress debt has caused this year though, notwithstanding I believe it will pull through and SH will benefit from only warrants dilution. We will just have to be patient.