guys, my prediction was absolutely correct, as disclosed i sold out at 40c before the results and my intention was to buy back in at 30c, but i will not be buying back in at all now.
after reading this report the situation is even more dire than i expected.
they did absolutely no business in the second half of FY08, the business does not have any recurring revenue, they are operationally cash flow negative and are relying on asset sales to provide cashflow, they must sell assets according to a very tight deadline and with flawlesss execution.
but perhaps the thing that struck me the most is they intend to start a new business from scratch with a completely new business model. this was a stunning admission.
just a few months ago they were saying they would focus on aviation, shipping, rail and real-estate. now rail and real-estate have dropped out of the picture, and suddenly private equity has come in. and it doesn't end there, the core businesses cannot continue in their current form. allco must now go out and raise third party capital which they have admitted is going to be very difficult
so to summarise 1. this business does not have any recurring cashflow 2. allco is now a start-up business with a completely new business model
imo the equity is worthless. imo the shareholder letter on friday was forshadowing administration.
i am now getting increasingly worried about my exposure to afgha. there is still $700m in senior debt to be cleared before afgha holders get anything. imo in adminstration we would get about 10-20c in the dollar back, which probably justifies the current price.
as for ahug, they can suck my balls if they think allco is going to give them its precious money so they can pay ahug holders the full $100 per note, when afgha notes are trading at $17.
they think just because allco gave them a letter of comfort that amounts to a binding guarantee. i am a lawyer and that will be very difficult to prove, and ahug doesn't have the money to take allco to court.
AFG Price at posting:
27.5¢ Sentiment: LT Sell Disclosure: Held
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