What is the best outcome for salvaging some value for Synlait's minor shareholders?
If the loan is approved, they avoid liquidation but will have the value of their holdings more or less wiped anyway by equity raising. By my calculation, any equity raising would probably push the SP sub 10c.
By contrast, if the loan isn't approved and Synlait misses the $130M payment, the company will cease trading and begin an insolvency process.
Sounds bad, but in Bright and A2 Milk you have two parties with a vested interest in the company and its assets. One or both of them will step in, and there's a good chance that would require buying out the minor shareholders at a much higher price then if equity raising were to occur.
When I think it through, I can't see any rational reason why shareholders would want to approve this loan.
A2M Price at posting:
$6.61 Sentiment: Hold Disclosure: Held
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