Whenever I think about this Jim, I don't really see anything apart from receivership at the end of it all. But - as krispy says - we don't know all the facts.
I'm not up to date any more - gave up bean counting to do something even more boring some years ago - but my guess is the situation is like this.
1. The SGH law firm businesses as a whole have gone backwards in the past 6 months, which reduces their potential value. This means the Bank's security position has also deteriorated in that time.
2. The banks won't want this to be around for a further possible deterioration in another 6 months - so I think they'll bring it all to some sort of conclusion no later than April / May this year (the current 3 month period during which the re-cap plan has to be done.)
3. The way AG was talking, he believes he can do some deal with the banks, and this was the reason why there was a the difference between what the directors said about "going concern", versus what the Auditors said about SGH being a "going concern" in the half year report.
4. Unless he has some understanding directly with the CEOs of NAB and WBC, I think the auditors will be the ones who are right.
The reality is that the Banks are in full control and they probably have just 2 options - both bad.
(a) Receivership. Assume it will be a pre-packaged receivership, with the law firms probably being sold back to the principals. The SGH shell would stay alive to sue Watchstone etc, but would be delisted.
or
(b) Keep the SGH Group together initially but with new management, with some additional smallish loan to allow them to trade. Sell off whatever bits they can at reasonable prices when they can. Maybe de-list to save money.
With option (a), I'm sure there are all sorts of regulatory issues that Grant will know about with a law firm receivership.
With option (b), if they do a debt for equity swap there are massive regulatory issues.
If they don't do d4e, control stays with the current SH, which wouldn't be fun for the banks.
So maybe AG has some sort of scheme of arrangement plan on the table,
At the end of the day, I can't see why option (b) would guarantee a better return than a receivership.
And both option (a) and (b) mean the shares are worth nothing.
If anyone is offering to buy the debt off WBC and NAB at 35% or more of face value, you would think they will jump at that offer now and save themselves the bother.
Whatever happens there will no doubt be a lot of losers apart from shareholders (creditors etc).
BUT - one or more insolvency firms will do very well indeed.
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