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Fishinnick

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05/06/17

08:10

Post #: 25093290
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Originally posted by Nick Miller ↑

You'll let us know when you get back to yourself?

...without a deal being signed off

Which deal is that? That the terms of the "New Facility" had not been finalised at the time of the 31 March announcement or the long awaited recap deal?

What surprises you about either of these changes?

I don't see either as being inconsistent with a future DFE. Perhaps if the New Lenders originally had intentions of forcing an Administration event, then yes, extending a new loan and capitalising interest is probably counter-intuitive to that.

But the 17 March announcement puts this into perspective.
- "solvent restructure"
- "The Company and New Senior Lenders believe a Restructure by a DFE SOA is in the best interest of all stakeholders"

I see the New Facility highlighting the Company's most likely desperate need for cash (IMO). As at 30 June 2016, the Company had already fully drawn the facilities within the SFA and was almost wholly reliant on its business to produce +ve operating cash flow. We know that didn't happen in 1H 17, which then started media speculation around its ability to service current liabilities (e.g. payables, payroll etc).

As for interest capitalisation, this goes hand-in-hand with the cash problem. Interest was partially if not wholly capitalised in 1H as per the response I received from IR. Given the 1H result was still cash flow -ve, what choice did the New Lenders have but to agree to capitalise for the next half period?

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The super senior debt deal surprised me to some extent. I expected the need for cash injection and capitalizing the interest in some way, but was surprised the new lenders did it this way. This way keeps the share trading and puts the DFE in doubt, it gives them a way-out pinned with time and performance and possibly no dilution imo.

SGH Price at posting: 9.3¢ Sentiment: Sell Disclosure: Not Held
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I am back. So is SGH, page-1408

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