A great post and I would like to pose a question. Why can't sgh...

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Zylophone

17 Posts.

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24/05/16

06:59

Post #: 17847395
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Originally posted by Melrosian ↑

Pos98

1. NIHL ( 53000 cases) is an activity SGH acquired for zilch. SGH splits outcome profits with WTG. WTG had spent $144M
on the cases at May 15. SGH has spent a further $30M to 31.12.15. Assume another $30M to June 16 and ? thereafter as it exits stage left. The Total Fee income could range from theoretically from $0M to $500M. Counsel more knowledgeable and better researched than me is suggesting 45 % success rate ( with a prudent hat on) ....that, at 45% is $225M cash from which deduct WTG share and all that SGS has spent on them. I am hoping it is nearer 55% success and if so there is $200M cash ...by June 17?

$200M cash would reduce debt to $550 m ish.

2. Wilson research points to 15% case throughput reduction - broadly speaking that should produce more than $50M as WIP is reduced and harvested,

.............so down to £500M

3. Then Medco logjam looks as if it is unblocked and SGS was firing through office move in 6 months to DEC 15 and
surely will be gathering a bit more steam . Cash per annum from SGS - $40M ?

4. The OZ and UK legal elements will hopefully shunt out some cash .

I believe it is quite probable ( but not yet certain) that SGH group heads for below $500 M borrowings by June 17.
I think that would give the green light for a return of institutional investment. I hope too that there is a behind closed doors roadshow to institutions when blue sky is close.

If so SGH will have gearing but would not be seen to have very high gearing. I believe the group can probably generate net cash of $75M and by June 19 may have $350M borrowings.

When it comes to renew facilities I dont see a problem unless the good trading outcomes I hope for turn out to be mince.

Of course there are teutonic plates shifting in the UK legal market and how its financed. The move to near cash accounting could squeeze finance derived from banks ( Becoz if lots more WIP is to be valued at zero-banks will be asked to finance thin air and they cant) . In the ongoing consolidation ahead this should all play into the hands of big SGH.

SGH has strategic choices and there are other ways to shed debt quicker.

mel

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A great post and I would like to pose a question. Why can't sgh look at previous years WIP and average the amount that gets paid and therefore is proved profitable, for the balance sheet. Ie not put in all the WIP because a .proportion is not paid and is a loss. That might satisfy the banks. Also what is WTG?

SGH Price at posting: 53.0¢ Sentiment: Hold Disclosure: Held
3 Upvote

0 Great analysis

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