Denbo You are guilty of Re-ification. Organisations do not...

Denbo

You are guilty of Re-ification. Organisations do not think.

The figures were there - no positive cash flow and we know what that means debt wise - and at this stage it is all about the debt. Yes I 75% bailed and took hit. But I lurk waiting for green shoots.
Those with an interest in driving SP even lower had a field day. Their agenda has been clear for 18 months and longer if you look back at QPP boards. It does not mean they are all right.

In there however is a large organisation which is reorganising and in time we shall find out whether
it generates good profits. In my book the directors took us into this deal with inadequate equity. A deal like this works if after a year there is evidence of the drivers going in the right direction . Well we have not seen that. Yet. The actual results and commentary on the actual results is to come. If the directors can not bring the cash outflow to a halt and reverse the trends - it is bad. If they can - there are things they can do. So it isn't all over.

I believe that an organisation like SGH should b e able to generate $40-$50 M +ve cash flow on an ongoing basis. I reckoned at deal time it would take 2 years to extract the cash from NIHL. ...and we have another 6 months......if I was wrong and it was 2.5 years...we still have a year to see the one off cash +ve from NIHL.

I have no idea about the escrow monies - because the warranties will have been drafted to protect WTG
..but they may have had clauses to do with NIHL and indeed there may be a case for arguing misvaluation of WIP. Dont know - but $ 80M would be handy.

Debt/equity swap......could be painful .....but as and when and if confidence, profits and cash flow can be restored to SGH the post swap deal would I assume ensure a MC of multiples of Profits after tax.

The actual results could be interesting. If the directors have not read books on how turnarounds can be made to work. I suggest they get reading. I reckon AG has only 6 months to produce trend lines which support his vision and the 90M brand advertising. I hope he does because the brand is in danger of becoming damaged goods.

As usual DYOR.

mel