SGH bear is dead and burried, page-428

Probably worth recapping the various options for recapitalising / refinancing. Up to the individual to make an assessment as to which they think is likely to eventuate.

These include:

1. Debt for equity swap. Likely to be pushed by any "vulture" distressed debt funds who may now hold SGH debt, but generally less preferable to NAB/Westpac/other corporate lenders. Extent of dilution for SGH holders would depend on conversion price and quantum of debt converted (which could be reduced by initiatives outlined below)

2. On-market capital raising (low probability given current price, CA overhang and absence of institutional support for SGH. Would probably require a new investor/s to cornerstone and provide support)

3. Equity capital from a new investor/s

4. Pay down of debt to manageable level through initiatives not involving raising new equity capital (e.g. cost cutting, NIHL proceeds, escrow proceeds, sale of certain SGH assets, other big wins e.g. from class actions SGH is running)

5. Straight refinancing by the syndicate (with/without new lenders coming in), which would involve rolling the loans at the maturity date. This would be more likely to happen if part of the debt had already been paid down through initiatives described above. This, however, would be made more difficult if further chunks of debt are on-sold to distressed debt funds, who are obviously not in there to roll corporate loans.

6. Takeover

7. Voluntary administration. Appears unlikely given the sequence of events over the past 12 months, however worth reading this case study (http://www.theaustralian.com.au/bus...f/news-story/bedb8371a52576243591fbe2d7d39506). The gist is that the Directors of Parminco put the company into VA in the face of opposition from the lending syndicate. This is because they faced personal liability for trading insolvent, which the lenders didn't.

8. Others?