best and worst case outcomes for asset sales, page-2

Good discussion points P/one

I will preface my comments by saying i know nothing of the forestry or automotive divisions (which may qualify me for a seat on the ELD board), but can add my 2 bob's worth on rural services.

Unfortunately, your estimate of $300 m + could be bullish IMO P/one. ELD's underlying rural services EBIT in FY 11 was around $25m. Whilst they have taken out some costs and may have made some ground in sales, they are going to cop it in neck with livestock comms...where ave stock prices have dropped 25-30% yoy.

Let's say they could deliver an EBIT of $30m, they would then need to achieve a 10 times multiple to hit $300. With recent agribusiness transactions happening around 9 times (even GNC, a far more robust and desirable agribusiness, is being bid at about 8.5)it is difficult to see ELD in what amounts to something of a fire sale hitting anywhere near 9! So, let's say we went with a more conservative 8 times, we are looking at around $250m.

Of course, my EBIT forecast could be way out...but how would anyone know with such limited guidance!