The sellers..........., page-38

The reality is that it will be extremely hard (perhaps impossible) to get financing for this site because it is:

1. Rural Land
2. Commercial facility with zero yield for 1-2 years
3. Low residual value if the business fails
4. No recyclable parts (minimal carcass value) to resell for the lender to recoup their debt

It is effectively an unsecured loan. So let's review some standard lending rates:

Residential - 3-5%
Commercial (metro) - 5-7% (rural) - 6-10%
Residential Development (Senior Debt) - 5-9%
Commercial Development (Senior Debt) - 8-12%
Mezzanine Debt (Resi development) - 14-20%
Mezzanine Debt ( Commercial Dev) - 15-25% (if pre-leased)
Unsecured Debt - 15-30%

Also Loan to Value Ratio (LVR) for commercial property is typically around 60-65% of bank value.

So realistically for the facility needed for Mildura where the facility will need funds totalling $100m plus, it would be reasonable to expect CAN to have to make a personal a contribution of $40mill.

On the remaining $60m loan, we can expect them to have an annual interest payment of at least 20% which would be $12m per year.

Clearly, this is unachievable and needs one of three things:

1. Building a smaller facility
2. Capital Raise of > $40m and diluting existing shareholders
3. Selling the facility to another party who would have the freight to complete this project

It looks like a bunch of kids who tried to play "property developer" and realised the hard way that life is tough.