In AR16, SGH paid $42m in finance costs (through the P&L) but...

In AR16, SGH paid $42m in finance costs (through the P&L) but $35m according to the cashflow statement. No issues with this.

Finance charges however were charged on $682m in net debt or $765m in gross debt. Again, no issues with this.

Fixed interest debt was circa $90m with fixed interest being 2.47%.

Variable interest is LIBOR + an agreed margin.

According to the P&L, in F16 they paid the equivalent of 5.5% (including the special finance charge, based on gross debt).

According to the CF they paid 5.1% (based on the net debt).

Broadly, then, during F16 they paid circa 5% including the special refinancing charge.

For most home mortgages today, customers are still paying this or higher and that's with the mortgages secured by bricks and mortar.

Most businesses however are paying between 6-10% for their facilities including where they are typically backed up by RMDs over all business assets, backed up with mortgages over their homes, and supported by personal guarantees.

So, for all the issues that SGH is facing, one of them that they cannot arguably afford is being called upon to pay a much higher rate of interest than what they are currently paying.

SGH have messed this all up and basically have lost the Company, the shareholders and arguably the banks on very cheap finance. If (and it really remains a big if) SGH survives, the one thing that the banks will not continue with is cheap finance.

When virtually every other professional business or practice put there is being charged higher interest than what SGH is being charged, it amazes that the excesses of SGH are being visited upon true rest of the professions through an increased tightening of lending conditions, performance reviews and covenant /compliance obligations.

If this is what the banks are doing towards others in the professional services sector, it is doubtful that they will let SGH lightly off the hook.

There may well have been some provisioning (mainly be Westpac) whilst the minnows have sold out their debt, the fact remains that the face /coupon rate of the debt has remained unchanged, has not been discounted and absent something being agreed to directly with the Company, will be required to be paid back in full.

The banks may therefore still continue to support, but they will not stump up any fresh or additional facilities and certainly not so at such cheap or easy going rates. And certainly, not with Skippen still there or Grech. Both should have gone well before now but especially Skippen.

Likewise, someone should have put their name to the ASX release of 16/2 yet no one did and that (of itself) is quite concerning.

Where is the accountability?

Where is the governance?

Where is the respect to the shareholders (to name but a few)?

Monday may well demonstrate a change of sorts but even if so, neither humility nor any apology will be there. Time therefore for them to go and for Houghton to be given the reins of countrol in order to make this right again.