I think that some clarification is required here in reference to some of the numbers thta have been put up:
1. How much did the new lenders pay?
This is not known because it has not been disclosed to date. Some information has found its way into the media but, apart from this, it is speculation regrading the final amount paid. What is known however is the following:
* Macquarie sold $20M @45c/$ (AFR 6/12/16) = $9M cost.
* WBC sold $250M in March 2017 @$65M (so, @26c/$). Refer, Motley Fool 16/3/17.
* Barclays sold their £50M (circa $84M at the time, but $87 at current FX rates of 1.74) at 22c/$ (AFR 10/3/17). This suggests a paid value of $18.5M.
* NAB sold its $300M in March 2017 at a similar rate to that of WBC --> ~26c/$ (ie: $78M).
* 94% of the debt was sold at that time at a discount to face. 6% of the debt was not sold (AFR 17/3/17; ASX 17/3/17) ).but likely has since been taken over at face value (ie: $44M+). But even if on sold at 26c/$ (as with the other majors), the cost here would have been $11.5M.
* The remaining debt was sold at circa 20c/$ --> 25c/$ in March (SMH 16/3/17; AFR 17/3/17). So, based on there being $738M in debt at 31/12/16, this suggests that the remaining debt sold totaled $40M. Likely value realisation therefore was therefore circa 26c/$, so circa $10.5M.
Put together, then, somewhere between $694M - $738M in debt has since changed hands for between $181M (if 6% unsold), and $192.5M (if 100% sold). If however still retained, then the effective cost is $181M + $44M = $225M (effective, invested value).
Since then, however, the new lenders have invested further, as a result of their decisions to:
* capitalise $32M in interest, so +$32M to the equation; and
* new working capital facilities of $40M, so +$40M to the equation.
Bringing this $72M in new amounts in as part of the equation, takes the overall invested value to somewhere between:
* if 94% sold = $181M + $44M + $72M = $297M; or
* if 100% sold = $192.5M + $72M = ~$265M.
Either way, the invested value is itself quite significant and falls somewhere between $265M - $297M (call it $300M), rather than down lower at $150M.
2. Present loan value?
If interest has been capitalised then in essence, it will be shifting in character to equity, so the current indebtedness is (FX unchanged) circa $738M + $40M = $778M. if however the capitalised interest were to be added in, then it would be $778M + $32M = $810M. It is not however $1.2B.
A deteriorating FX rate however will make this progressively worse (at least in A$ terms which is and remains the reporting currency).
3. UK lawsuit
The flagged UK lawsuit is for £600M, not $600M so therefore is circa $1,044M at current FX rates. This is in place of, not in terms of being in addition to the escrow claim. Equally, it is not something that can be hedged for, so therefore is at the vagaries of any future FX movements (good, bad or indifferent).
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Right now, the new lenders need circa $300M to cover their current exposure, ignoring however any holding /funding costs that they have themselves, etc.
Going forward and assuming no further funding /support requirements, and factoring for a minimum 25% ROI, for every 12 month period that this takes in order to work its way through, will effectively cost a further +$75M (minimum). So, right here, right now, the new lenders are probably looking for a minimum required exit /realisation value of $400M which essentially just gets them their money back, plus holding costs /some initial ROI. But then, there is also the CA in play, the continuing restructuring that is required, etc. To get this all done, dusted and sorted, therefore suggests a minimum time frame of +2 years. Actually, probably closer to +3 years which correlates to the term length of the new working capital facility. If so, then on a minimum basis, the new lenders would be looking to get back >$500M but even then, this would likely be described as an average, not a great, investment for them.
In other words, the strategy going forward is likely to be 10-fold:
1/ stabilize the business;
2/ factor some measure of DFE (probably for up to 1/2 -> 2/3 of the o/s debt acquired, so circa $370M -> $500M) whilst keeping the remainder as interest bearing debt, either i only or preferably as Pi reducing;
3/ jettison non-core business interests and /or poorly performing areas of practice;
4/ ramp up the restructuring /cost cutting exercises to make more profitable on a leaner, more cost effective basis (even in the face of a lower revenue result happening) ==> aka grow margins;
5/ quarterise the MB CA (a bit tricky now having regard to the UK claims);
6/ perhaps further capitalise interest but otherwise re-start the interest payment flows but restrict future principal reductions so that they are paid out of the sale of non-core business interests, etc;
7/ continue to pursue the UK claim but somewhere down the track, mediate on and resolve this;
8/ at that point in time, to arguably have a recovering business which is functional, operational and profitable, if not at a financial level, then at least at an EBITDA or EBIT level;
9/ look then to facilitating exit, either through repayment of the loan facilities /refinancing at that time, or a combination of this and DFE;
10/ exit altogether (with remaining debt having been repaid or refinanced) whilst continuing on as a passive investor albeit with some measure of managed sell down /placement in place. This is where, if everything else proves effective, the new lenders will make their real ROI. It is and remains however a clear and present danger for at least the next 3+ years (looking at this from various different angles).
During much of this time, however, the risk, share and debt overhangs will remain, as will the uncertainty, the sideshow distractions, and the business dislocation. They may very well have various plans in progress but the question is (and remains) whether they have got everyone yet on board with what they intend on doing? In this regard, the best answer that can be given at the moment is - uncertain, with all options being open and all being equally canvassed. This is also why the SP is not being met with much reaction, no matter whether the news is considered good, bad or neutral. There is therefore still a very long way to go, the very first requirement of which is to restore SGH to sustained profitability, on a real operating basis, with an improved margin result, even if done off a lower recurring revenue base.
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