Hey @denbo - you seem a decent fellow - I hope it all works out...

Hey @denbo - you seem a decent fellow - I hope it all works out ok for you, Krispy and all holders. I don't want to see anyone lose money on this. Heck - I even hope it works out for SuccessWillCome, even though he's been inviting bad karma with his poor behaviour this morning!


So - without I hope sounding negative - I would encourage you to work through the following thought process...

First - I agree that all of these things you say could happen in the future. Spectacular NIHL income, Watchstone compensation coming in above escrow - and these would indeed deliver windfall gains to SGH in the future if they did.

The problem for current shareholders is that the company has very serious solvency and debt issues - and in order to buy the time they need to be around to collect future windfall gains, the company must recapitalise on to a solvent footing.

This recapitalisation will very likely take the form of a debt-for-equity swap.

And this debt-for-equity swap - in order to make any sort of dent in the $700+M that they owe - will involve significant dilution of current shareholders.

Hoping for anything other than significant dilution really means hoping that the debt holders will act against their own best interests - which I'm sure you would agree is unlikely.

The recent Boart Longyear (ASX:BLY) recapitalisation is a useful comparison as to what is likely to unfold here - it's not pretty.

The net result is that the benefits of any future windfall profits would go to SGH, however they are unlikely to flow to current SGH shareholders in any significant way.

I realise this is probably depressing news if you are "in" - however it is unfortunately the position in which the company board and management of SGH have placed you and other current shareholders.

Good luck.

Steve