nwt, page-34

demerger, I agree with most of that. I think the key to what is happening lies in this NWT statement:

"The loan funds will be used for the teleport business and to cover costs associated with redundancies, supplier costs, investment in acquisition initiatives , retention of existing customers, and redeployment of resources necessary to refocus revenue generation"

The above relates to the $10m loan from Ching that must be repaid out of the $40m raising. Clearly a working capital issue. There will be covenants on ExIm loan in regard to working capital and revenues, I'm certain. Teleport is the only source of current revenues and I think it is a fair assumption that finances were revisited by ExIm when the revenue stream declined. In addition, there are increasing supplier liabilities, I assume to be outside the scope of the J1 funding. The other major clue is the demand for a new CFO, hinting at questionable financial management.

It looks like a case of financial covenants breached and therefore shore up with with fresh capital to bring the metrics back in line. It all sounds ugly but I think it is a positive in the long run. The plug would have been pulled if it was determined 'beyond repair'. Of course, NWT have to deliver financial controls to ensure they remain within the terms of finance but there is no reason why those controls cannot be implemented and maintained.

This next week is crucial and will say a lot about the future, I feel.