mutton dressed up as lamb!

I have had a look deeper into the announcements. I find a few things disturbing.

1) QBE - they are nothing but a vulture on ELD not a friend. They got their foot on the insurance business for 50% of premiums (a bargain). Now they get a re-negotiation of their purchase price on the stock down from 40c to 15c. Shareholders who were praising the insurance deal and arguing the QBE support was great have just been shafted!!

2) People forget that the net debt number is contingent on further asset sales. What they fail to realise is that ELD is cum a large amount of extra capex. This is because they have been scrimping every dime for many years just to get through. They have mountains of capex to spend in their businesses going forward so debt will build from here.

3) The forecasts of $84m EBIT are very rosy. It relies on a big rebound in the rural business which is possible. But what sneaks through in the forecast is the MIS business profit forecast increase from $10m to $16m. I beg to differ and think that this could fall sharply due to the falloff in MIS sales and as costs continue to build. I appreciate ITC has a different revenue structure in that investors pay ongoing fees but these can be deferred at the investors request. I suspect a lot of deferrals will come though forcing a bigger burden on ITC. I guesstimate that this business could make a modest loss and go close to cancelling out the rural business gain. ELD could make about 50% of the profit it is forecasting.

The lies to dress up the mutton as lamb are astounding. I suspect the company is back in the bankers hands or back to investors within a year. I suspect they will try hard to sell the company before then which may be a saving grace.

M Jackman is a stooge....