Not entirely correct Alex - some posters here do understand...

Not entirely correct Alex - some posters here do understand those things.

SGH isn't dead yet. I can see 2 situations which could cause a revival in fortunes:

(a) the messiah situation. SGH gets a sudden change of management, and they are so impressive or have such a good record that the banking syndicate decide to cut SGH some slack, and the new management trade their way out; or

(b) some external event goes in their favour - ie the equivalent of something like an overnight doubling of the iron ore price would have on Fortescue, or maybe the House of Lords in the UK hear an appeal and decide that anyone who is currently claiming NIHL obviously has a valid claim and must be paid out immediately by the insurance companies.

Obviously neither of these are remotely likely.

So next option is the survival strategy - option (c)

(c)
- They sell off the non-legal part of SGS to someone who knows how to run it for maybe $200M and use that to reduce debt. The non-legal part of SGS may have a sustainable annual EBITDAW of $35M to $40M. If they can get a sale multiple of 6 times ebitdaw they could be in the ball park.
- They shut down SGS legal to stop the cash bleed. Give all the files away or tell the clients to pick them up.
- They sue Quindell (WTG ?) with their ears pinned back for breach of warranty / fraud whatever, to get the $100M in escrow, and use that to reduce debt.
- They prune expenses in the UK law firm to get it back to cash flow neutral or positive.

SGH is left with $400M in interest bearing debt, which - if all goes well - they just have the cash flow to service.
Then they hope everything goes right for the next 20 years by which time their interest cover may be up to 200% or so.