Grant, I think your analysis is fine but I think 400bp is on the high side for a company loan that has not missed an interest payment and now has bank's own eyes ,MGN and FTI, calling the shots, I was thinking more likely around 250bp, which would be in 5% range. Obviously this increase will have an impact on cash flow , in the vicinity of A$18.5M per year, but offset with no dividend payment in the near future. Couple this with tax relief , due to non cash impairment charge and the balance sheet is not impacted by increase in interest payment. This scenario is dependent on Q3 being cash positive. IMO SGH is salvageable because revenue is solid , at least A$1B for FY , the outgoings are the problem. Many companies that have gone into VA have both sides of the equation in trouble, revenue and costs, but in SGH case revenue is OK with good % growth in H1.
SGH Price at posting:
27.0¢ Sentiment: None Disclosure: Held
