break up value, page-20

Hi Twinson

I am a worried goldbug. I have concerns what a GFC2 could do to the POG and our goldies.

I have been following MYR due to my distaste with the IPO and the way people were fooled.

Most of MYR's asset value is in its goodwill which can easily contract to next to nothing. It may well end in tears. Retailers are hurting badly and GFC2 in combination with internet shopping may put the final nail into MYR's coffin. The asset strippers have turned MYR's real assets (real estate) into liabilities (property leases and debt) and taken out its cash, thereby putting the company's future at risk.

At 30 December 2010 MYR had creditors of $517m, other short term liabilities of $238m, and net debt of $252m. The assets included intangibles (goodwill I suppose) $901m, inventory $378m, fixed assets $503m, tangible funds employed $249m, property $27m, and other assets of $98m. From slide 7 of this presentation.

http://www.asx.com.au/asxpdf/20110317/pdf/41xhn53lh1tc15.pdf

This is not a pretty picture with liabitities and debts of over $1 billion. Goodwill vanishes, while fixed assets and inventory get badly discounted in a liquidation of a company. Not sure what tangible funds employed means (would need to check the accounts), but I suspect these too wound be heavily discounted in a liquidation of the company.

loki