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So: - If BLA miraculously salvages the business and the share...

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214 Posts.

169

15/10/18

23:21

Post #: 36132825
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Originally posted by pikel1980 ↑

Originally posted by taipan168
The most interesting thing for me is that despite all the denials and former management screaming blue murder, that BLA needs a black knight demonstrates that Glaucus was right all along. The fact that they need a $50m capital injection just to keep on going precisely proves the point that the business model was broken, it's just that nobody realised it, except for a couple of other short seller research houses who got hit with threats of litigation from BLA.

The other interesting thing is that the share price is now down to less than half Glaucus' original target of $2.66.
I just cannot believe that people were believing the garbage BLA were putting out and even when it was exposed they screamed and screamed and screamed. Now that we have had the light turned onto this company, even Glaucus couldn't have guessed how much of a house of cards it was.

15% interest on 50 Million will kill this company, there will be nothing left (especially given that they said they had 30 million at 30 June and that isn't enough to keep the lights on???). But the other really interesting element of the deal is that Oaktree will have the right to convert any parts of its loans onto equity up to 10% of the issued shares during the term of the loan at certain key dates. Now some people have read into the deal that the 50million for 30% of the company values it at $x. But thats not actually how this will work, Blue Sky will owe Oaktree $50,000,000 year 1, then 51,250,000 at the end of the first qtr, then $52,531,250 at the end of the end qtr, and so on until we get to the 7 year mark and Blue Sky now owe them between 95mil and 100mil depending on if they convert . At certain points in the 7 year deal, Oaktree can convert any part of their loan into shares capped up to 30% of the company, in components no less than 10% of the company - at $1.87 per share. So at 77 Million shares, that would mean an extra 33 million shares issued under this deal at $1.87 per share, that comes with a price tag of circa 60million, blue sky still have to repay the balance 30mill / 40 mill that is outstanding...

I also thought it was interesting that in one of the news reports the acting MD has stated that he isn't interested in the role long term and that the board will be making an announcement at the up coming meeting.

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So:

- If BLA miraculously salvages the business and the share price goes over $1.87, Oaktree gets up to 30% of the company fixed at that price, plus the remaining cumulative debt paid

- If BLA bumbles along at current levels, Oaktree just makes roughly 2x back on its $50 million over 7 years

- If the stellar negative revenue in the 2nd half of FY18 picked up by @pikel1980 continues and sends the remaining equity down the toilet, or there is a "Review Event", Oaktree can rely on such friendly clauses like having "first ranking security over all the assets and undertaking of the Company and each guarantor".

Clearly the smartest guys in the room are not the ones investing in Shoes of Prey and flogging off Brisbane apartments.

BLA Price at posting: $1.25 Sentiment: Sell Disclosure: Not Held
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