SGH (ASX) Dilution at this price

Originally posted by croasian ↑

Let me drill it down.
Historical results are of an unprofitable business.
Combined with financial position and market capitalisation these results when run through the Altman Z score indicate 80-90% chance of bankruptcy within the next 12 months.
For any business this is the worst case scenario.
The company has announced it needs recapitalisation as results to 31st Dec did not meet expectations. It's not in a position to dictate terms or shop among banks given its aforementioned performance and position. So providers of equity will dictate the terms.
The banks won't close on your mortgage if you can pay but that's the point, it's not clear SGH can.
These are all facts and quantifiable now we have to speculate on the future with little info.
As to SGH earning $100m NPAT next year I suppose it's possible, it's a theory but not based on anything I can see.
Granted restructuring will reduce costs but what else has changed to make the business so extremely different to the past?
Profitability is defined by underlying economics you can cut costs but you need to provide a service if you want a sustainable business. Companies can't just choose their profitability by restructuring.
Even if this was a turnaround rather than an apparently fraudulent startup, they always take more than a year in which case shareholders get diluted by capital raising to say 10c per share (best case scrape by with $100m raising). Realistic base case administration $0.00c per share if no-one is prepared to throw good money after bad.
That means you shareholders, are you going to support recapitalisation? It's unlikely the banks will just waive your debt.
I am not hearing any discussion about this just wishful thinking IMO.
Not holding don't care either way or give free investment advice so DYOR.

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You and me read the recap announcement very differently, I see it as a positive and look forward to seeing the deal they present to the banks. Companies don't usually push out negative announcement right before slapping their shareholders with a cap raise.. you should know that based on your much loved santos that they ramp the price first (fake takeover offer or getting companies to buy stock at inflated prices off market and announcing it - stung you twice there).
So if SGH had intentions of a cap raise from their shareholders it's highly unlikely they'd be letting the market know about it before they do it. They would have done it long ago at much higher prices if they were going to.