SGH bear is dead and burried, page-62

As at 30 June 2016 the board actually owned less than 5% of the stock, about 3.6% (A/B below) to be more precise. Check the preliminary FY16 Annual Report on pages 18 (Directors' Interest) and 72 (Note 5.5: Contributed Equity).

Total Directors' Interest = ~12.7m shares
Ordinary shares fully paid = 352.2m shares

If a debt covenant was likely to be breached as reported and this was the catalyst to amend the financing facilities again, the banks are very much in charge. In this scenario, a second refinancing event in less than 12 months is clearly worse than 12 months ago.

My earlier post suggested that if an agreement has been reached to retain the existing maturity profile in the first instance (obviously desirable for the company), the subsequent negotiations would be subject to accepting some form of recapitalisation. So it lives to fight another day, despite the near miss on the debt covenant breach (i.e. avoids debt becoming payable in May 2017), but this comes at the expense of future dilution for SHs.

The 'mass conspiracy against shareholders' is they will be the last to find out what deal has been negotiated. Does anyone think they will negotiate the same deal as they did back in April? It is clear whatever deal they can negotiate they will have to pay for it in more warrants unless their FCF generation in 1H 17 has been amazing.

The article has some merit because it puts the lenders self-interest into perspective, which is at odds with SHs. The Board's less than substantial holding in the company makes little difference.

Obviously krispy will jump in on this and say the upside justifies the downside, we are all adults and know what we are doing etc, IMO I don't think the situation is better now than it was in May post refinancing. At least the company had more time on its side at that stage, the lending syndicate was still in tact and NIHL was a still largely an unknown. What new bargaining chips does it have beyond the now limited passage of time?

I hope I am wrong and will happily concede the point if this thing doubles again following conclusion of the refinancing/recapitalisation. It really seems a bit of a coin toss atm and I think there are better risk/reward plays out there for people who still want compelling returns.