korda mentha, page-11

As usual you are right on top of things Winteck.

The company is under review - so of course the banks will appoint a specialist to do the work for them rather than do it themselves which would occupy their time and money.

Heavy debt? You mean net debt of all of $36m at 30 June. They have always carried too much liquidity - $124m cash at balance date and will need far less when the Fortescue contract is complete. Gross debt was around $160m but they will pay a heap of this off with their cash.

So how did the look forward ratios on ND:EBITDA and EBITDA interest coverage look to you Winteck? Looked fine to me. I'm sure you've done these calcs right?

The most likely situation is they continue on with the current banking syndicate although the facility size will be significantly reduced (no need for $317m), gross debt will also be reduced (I'm guessing to less than half what it is now), some bankers will exit the syndicate (they don't need such a large syndicate anyway) and they will pay a higher margin on their debt (but less interest overall because of the smaller drawn debt).

They are still just throwing off cash flow from strong EBITDA and negligible CAPEX. If the banks just want out and they can't find other debt finance (someone will give them something even if it is just working capital) then they will raise equity - I'd put money in given the asset and earnings base.