current value, page-9

They owe virtually that entire amount to Royal Bank of Scotland. The moment they get it, RBS will want it.

I've been saying for months that RHG will not be able to refinance and that their loan book would default to the warehousing banks and holders of the XCP.

There's always been an "Oh, but this..." and "Oh, but that..."

No ifs or buts: RHG cannot run off its loan book, if it can't find long-term funding for its debt. It won't, in this market, and I can't see the market improving substantially before Feb 08.

A company with substantial capital can presently either:-
(a) sell off their loan books at a significant discount (between 80c and 20c in the dollar, depending on quality); or
(b) obtain longer-term funding, but at a higher rate of interest.

Sure, they take a loss and a haircut to their shareholders' capital: take a look at how much capital destruction has occurred in other banks and non-bank lenders in the northern hemisphere.

However, RHG has only $1m of net assets. If it does either of the above, it will be immediately insolvent. It must sell its loans at par, or obtain funding at pre-credit crunch levels. At present, it can do neither.

Talk of someone coming in a buying the loan books is fanciful, as I'd bet they are putting in offers at discounts reflecting the current market conditions. RHG simply cannot accept that, as they would need to place themselves into administration straight after. They need par.

Why would one of the warehousing banks or XCP owners make an offer for the book, when they can just wait until rollover date and say, "Thank you very much, that book is now ours."

I warned you at $1, 80c, 60c, 50c, 40c, 30c, 26c and now, I'm warning you at 20c. This stock is not a bargain.