Hatchworks,yes. they need to repay AUD120.9mln immediately after...

Hatchworks,

yes. they need to repay AUD120.9mln immediately after the restructure.

However, in addition to the strong operating cash flow pre- interest of AUD167.7mln over 6 months to 31/12/2008 (up26.8% on AUD132.3mln pcp), Let¡¯s assume pre interest net operating cash flow for HY ending 30 June 2009 being only 75% of the last HY due to economic slow down and depressed property development business, i.e. 75% * AUD167.7=AUD125.8mln,

you would note:

1. cash balance of AUD214.7mln as at 31/Dec 2008, and
2. post balance date sale of M4/M7 eastern creek VCS project with proceeds of AUD65mln per Jan 6 2008 announcement, with:

-AUD30mln received on 5 Jan 2009,
-AUD20mln expected to be received by 30 June 2009;
-the remaining AUD15mln to be received before 31 Dec 2009.

3. There might be some residual then yet to be received proceeds from the AUD140mln asset sale announced on Dec 17, 2008 (no details provided). We assume nil for conservatism

We now have: AUD125.8mln +AUD214.7mln + AUD50mln = AUD390.5mln by 30 June 2009
+ AUD15mln by 31 Dec 2009

4. Potential of Scarborugh payment deferral (without D2E swap)

5. Read "Going Concern" section on page 11, you would note that, despite all the payment, debt due, and the put option to purchase additional assets of AUD92.8mln over 18 months period, based on the restructured debt, net current assets of AUD316.6mln,and forecast earnings and cash flow, the company is still a going concern.

Mind you, the forecasts must have been reviewed and stress-tested by banks before they approved the deal.

6. Cost savings of AUD30mln pa to be fully realised in FY2010.
We might assume just 1/3 of that for FY2009, that will be an additional AUD10mln to the bottom line. Again, we only take comfort from this, but not assuming it in our cash flow calculation.

7. Interest expenses will at worst be at the same level as before the debt restructuring considering reduced debt level and benchmark interest rate largely offsetting the increased margin.

8.It still has the capacity to sell assets (eg. its 40% stake in the prime location Gold House project at Circular Quay in Sydney).

On liabilities/cash outflow side, they have
1. AUD147.1mln of interesting bearing liabilities due within 12 months; (this include the AUD120mln due immediately after the restructuring)
2. AUD75mln Scarborugh payment due in Sept 2009, with possibility of deferral;
3. derivative liabilities of AUD38.7mln (mark-to-market fair value , if we assume the full amount represent the closed out cross currency swap transactions, then the amount is for progressive payments until Oct 2010 Per page 3 under Cross Currency Swaps)
4. assume interest outflow = interest accrued, the same as the last HY period, i.e. AUD50.9mln per P &L rather than AUD30.9mln per Cash flow statement

Total debt & derivative liabilities due by 30 June 2009: = AUD120.1mln + AUD50.9mln + say half of derivative liabs AUD19mln=AUD190mln

Due by 31 Dec 2009: Scarborough payment AUD75mln +50% of the remaining derivative or AUD9.5mln = AUD84.5mln

Compare the cash available /to be received and the debt obligations, wouldn¡¯t you call that strong liquidity position?

In my view, the European debt restructuring is just a matter of time.

Again, I am saying what I can see from the accounts.

Pls DYOR.