mfs needle post

Hi Needle,

You're right...your points WILL probably be lost very quickly by a few posters however what you posted makes quite a deal of sense. I'd like to add my own summary to the common sense you have posted.

The media reporting in this situation has been very emotive and I honestly don't think the writers in the Heralf Sun, SMH etc have really studied the balance sheet....NOR understand how the ASX really works.

Given what has transpired in recent months with Rams and then Centro, it is understandably a certain amount of concern would be evident by people following MFS but the media has been poor here.

We need to read the flow of announcements from MFS via the ASX and balance those comments against the "rumours" in the papers.

MFS cannot release a string of lies to the market w/o the new CEO exposing himself to some legal issues.

Market analysts rely on releases and financials from companies on which to base thei opinions....and yes, we have all been rocked a little by MFS de-merger stratgey. The fall out means that some issues - such as the $150m loan refinancing become more problematic and cause SOMETHING of a knock-on effect - but it seems strange to think it will now cause the collapse of the entire business.

MFS news releases have in no way inferred that will happen.

But the media have.

We need to still be guided somewhat by what MFS are telling us in order to rationalise this situation CLEARLY.

Remember, the media are on the outside looking in, and clearly MFS are nott alking to them outside of what they are saying in their ASX releases (and I am talking now about Mr White - not Mr King, now).

We will all know more in the fullness of time but my thoughts as they stand right now are:

* We will probably see financial position under a little more stress than was revealed prior to de-merger position...but only because the share price drop may have triggered some further scrutiny and loan covenants (maybe).

* The fact they can sell some assets in BBC and MFT demonstrates MFS do have some liquid assets, even if forced to sell low.

* The sale of those assets must have been triggered by the additional repayment claim that bumped short term debt to $220m

* MFS have made no change to the statements regarding long term debt. i.e: there is no pressure there.

* I suspect the "transaction" that was going to clear the $150m loan is now dead in the water.

* MFS managed funds would be coming under pressure from redemptions. This will impact their total FUM number, an dprobably that $10b FUM target for Jun-08 will no longer be a reality. Interestingly though, ASIC haven't done anything to suspend investments in the MFS Premium fund etc. That should tell you something......because, whilst ASIC, have been accused of being slow to act in the past it has always been in respect funds that have already collapsed. MFS funds have not collapsed and clearly ASIC is satisfied there isn't a danger of that.

* What we have here is a bit of a liquidity squeeze for MFS - not a bankruptcy or wind-up (in my honest opinion). However, I concede MFS WILL now have to sell some assets at fire sale prices but I still doubt this will cause them to wind up.

* City Pacific have pulled out of the purchase of this funds management business AT THE PRICE TABLED 3 weeks ago. But it is still possible - and probably preferable - that this business still be separated or sold...because I would suspect the MFS name will no longer be palatable to the investment community. But make no mistake - that FUM business IS worth something.

* Now, just on the Stella business. I would suspect there is a case for arguing that MFS could collate ALL the offers they have received for the business and take these to a bank, then argue "Look, in a worst case scenaro...we still have offers for this business valued at XX, even though that is bargain basement". On that basis they could persuasively "argue" to a lender that here is a current market value for our assets and "Will you lend to us against this valuaton?" In other words, even at rock bottom, our business is viable etc etc (if you get my drift).

* I do not think the business is broke, despite the media. I cannot speculate on what the share price will be on re-trading, becuase some people will get out at any price...but it will all depend on the comprehensiveness of the next ASX release by the company concerning debt, Stella, Funds Management and profit forecasts.

Sorry if I have waffled.

Regards

Coop