They wouldn't have taken the debt on if they didn't think it was serviceable. Having debt is not a monkey on your back, it's a calculated risk taken that you believe you can borrow money now, to purchase something that in the long run will pay off the debt and continue to reward you. A very very large proportion of companies have debt, and whilst it's not the greatest thing ever, it's not a be all end all either. If SGH can turn around their latest acquisition to become cashflow positive, they will be reporting 100 million of profit per year again or a lot more, yes I am keeping in mind only 30 mil of that was free cashflow. The debt will be paid down a lot faster than you think, it could even be the next 5 years it is all gone if they choose to pay it down quickly. Which is the likely route as this is possibly their last acquisition for some time.
However Monday will be the day of Judgement, and until then, all ifs.
SGH Price at posting:
83.0¢ Sentiment: Buy Disclosure: Held
