Potential Acquisitions?, page-9

They are at a low cash hold moment.

The real issues are that TPG is valued at $1,7 billion but with the investment, it was going to do it really isn't paying much of a dividend. So it earns around 15cps for half a year and is paying 3c. That means that the investment of $1,7 billion is generating around $7 million in dividend income. They could easily sell $100 million and it would change their cash position and do very little to move the income dial.

They could sell a few of everything and get the $100 million easily. What I did not understand was why they did not maintain the dividend rather than increase it. Their results were released on 26 March and by then we all knew it was going to be a very difficult year.

My view of opportunities is that TPG/ Vodafone is huge and the last spectrum payment is fairly low and TPG generates around 770 million EBITDA and Capex BAU is around $200 million that's around $500 million cash flow. TPG should start returning to its old dividend and that should help.

New Hope seems to have pitched its dividend at 6c which was roughly its free cash flow. So SOL should get a regular $37 million from that.

Brickworks is very hard to understand as its almost circular but generally, they should be able to maintain their dividend if SOL keeps theirs.

They put together a neat schematic of their parent company on page 38 of the half-year results, their calculation suggested that their payout ratio is around 65%. I think that is a bit high but cyclically this is a low year.

Personally I think that they may see opportunities but the NHC and TPG opportunity is huge. If they can get NHC to get New Akland stage 3 approved and then add to that the TPG opportunity going it could be a very big growth period.

Just take a few extra ideas what if TPG Vodafone bid for Amaysim didn't move the Optus platform until it the Vodafone TPG base footprint had got its weak areas sorted and then moved what must be around $180 million payment to Optus straight into Vodafone... That excludes their profit as well and gives TPG an electrical retailer as well.

So I think they are too light on cash to go and make a lot of investments but they have options... I would even think a DRP and or small rights issue could do wonders as well. However, I concur that they are far too cash light right now.