merril lynch valuation of 69 cents, page-5

the way i see it:

rhg will net about 125m from this sale

but they have net debt of about 140m, so shareholders won't see any of this money.

so the only value in rams (assuming the deal goes through) is the loan book

as at 10 august rams loan book was worth 14.16 billion, funded

A3.92 billion warehouses
A4.07 billion rmbs
A6.17 billion US XCP

rams is confident of refinancing its warehouses, and rmbs is not affected by subprime, so $8bn of the loan book is safe and can be valued.

westpac has agreed to cornerstone A1.5 billion of the US XCP.

assuming the remaining 4.5 billion of XCP can't be refinanced, then rams DOES NOT bear the losses. the loans are auctioned and losses are shared between two market-value swap providers, one of which is a domestic bank and the other a foreign bank.

so about $10bn of rams loan book is worth something at this point in time.

imo there's a good chance of a better offer.