We can forget the $2, as the number of shares have increased...

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11/04/20

17:17

Post #: 44000531
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Originally posted by Wazz101: ↑

So my take on this:

Working Capital
G8 were rushed into this due to the delays in any govt support coming through and their high exposure to debt, having drawn at least $395m ( per 31 Dec) of their $500m facility. They sought a staggering $300m equity raise to resolve and keep them afloat through the downturn.

Profit & Loss
The support package is now known; they receive 50% of their revenue with attendances based on the last 2 weeks of February, pre COVID impact. This insulates them from any T2 decrease in attendance.they also receive JobKeeper payments for 6 months.their own assessment is that the impacts from the packages is that it will be break-even and there is some upside if they can wring any staff efficiencies brought by poor attendances, which they will be paid for any by the support package.
So they are underwritten by the government on their P&L at end of February attendances and have some upside with staff cost efficiencies.
Their working capital is boosted by $300m which is not required with the support packages now known and continuing for at least 3 months. and actually now have a war chest to look to make some acquisitions or fund working capital.

In terms of exercising the rights and paying the call, 80c would seem to be a low price to pay for what was previously trading at over $2 and there is plenty of upside with increased demand from parents as the virus threat recedes .

There may well be a hangover due to the size of issue, bit in my view it will be offset by picking up the rights and paying the call, lot of upside on 80c.

Thoughts?

Wazz

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We can forget the $2, as the number of shares have increased substantially....if it drops to $0.80-$0.85, it is probably worth a buy, but I wouldn't be buying it on much more than $0.8

GEM Price at posting: $1.08 Sentiment: None Disclosure: Held
2 Upvote

0 Great analysis

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Last 90.0¢		Change 0.000(0.00%)		Mkt cap ! $694.4M

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