Don't disagree. They are more than likely being 'forced' to sell...

Don't disagree.

They are more than likely being 'forced' to sell the NZ arm by the Syndicate Lenders as based on forecasts, they are probably projected to breach the covenant once it drops to 3.0x (hence the rush to lock in a sale before 30 June 17). Yes I know they have mentioned they won't breach but that's just management doing what they do best and preventing a scare in the market. Management can get away with this by providing a 'reasonable' forward estimate that shows they won't breach (which they are doing right now), and can keep kicking the can down the road until 30 June 2018 results are in.

I wouldn't say the NZ business is liquid but more illiquid. Hence, no point selling an accretive earnings business with EBITDA of +$60m for the ASC. They could use an alternatve funding source -> raise capital. I think they have a prime opportunity now that Horth has left. Use him as the scapegoat, and say 'unforeseen expenses or capex' have arisen now he is gone. Raise capital, and pay off debt right now from $1.06b to $0.9b. This has a couple benefits - interest expenses are reduced, cash flow improves and with this improved cash flow use it to fund the ASC in 2019. Then, in 2019 you have a business with EBITDA of $380m (NZ and ASC earnings retained) compared to EBITDA of $300m (post NZ sale).

Covenants:

NZ + ASC
$0.9b / $380m = 2.34x (NZ $60m EBITDA and ASC contributes $20m EBITDA)

Post NZ
$0.75b / $320m = 2.34x (ASC contributes $20m EBITDA)

Hence, retaining NZ and ASC is more benficial as EBITDA is greater but debt covenant remains the same.

What about earnings you say as shares are diluted, well if they raise capital at $2.50 per share then they will need to issue 60m new shares ($2.50 x 60m = $150m cap raise).

Comparison of earnings:

NZ + ASC
EBITDA of $380m / 622.2m + 60m new shares = $0.55

Post sale of NZ
EBITDA of $320m / 622.2m + zero new shares = $0.51

Again, retaining NZ and ASC is more beneficial.

Further to this, during FY19-20 they could do a share buyback (as EBITDA is now $380m), buyback $150m worth of shares which is the original cap raise -> this will up the EPS resulting in a significant uplift in share price.

I think they need to play the market better right now.