This is part of what Charlie said:"I have been watching the...

This is part of what Charlie said:

"I have been watching the trading in Asciano (AIO) each day and somebody is accumulating them. Industry Funds Management lodged with 5% last week and I suspect they may well be the buyer on market.

Clearly, according to press leaks, the AIO deal is heading towards a rights issue alongside (non core) asset sales. The target has to be a complete recapitalisation of AIO with at least half of its $4.8 billion debt load repaid. However, this will be an undenwritten entitlement issue and you will need to be on the AIO register to get access to the rights issue.

The reason AIO got into a near death situation was the combination of financial leverage and economic leverage. By participating in the AIO recapitalisation you will reduce the financial leverage to appropriate and sustainable levels yet maintain economic leverage at the bottom of the economic cycle and after the greatest dislocation in global trade ever.

... the Baltic Dry Index has recovered dramatically and global trade routes are clearly reopening as trade finance becomes available. Commodity prices are also telling you the worst of the global trade dislocation is behind us and thats pretty useful for a duopoly port operator.

The lesson lately is to support all recapitalisations. From banks through to listed property trusts (LPTs), second-tier resources stocks, and steel stocks. Supporting recapitalisations has been a genuine profit making strategy. Even last week, the market voted in favour of recapitalising RIO and those wh sold on the rumour of the rights issue have been killed on the confirmation of it.

The last big recapitalisation is AIO.

...this is the biggest industrial opportunity left to make serious money in the next few years. Its the last of the big recapitalisations and it’s in a highly cyclical industry. Even, better the stock which was once loved by fund managers and analysts alike now gives people a nervous twitch when you mention it.

I'd be buying a half weight in AIO on market over this week then wait for the rights issue announcement and concurrent non-core asset sales. I reckon this is the recapitalisation to go after.

AIO shareholders, if there are any left, should forget hoping for a full takeover.

The much, much bigger money will be made by recapitalising this owner of monopoly and duopoly strategic assets."


=> I THINK HIS DCF VALUATION WAS ~$3.95.

WOULD BE NICE TO GET $2.50+