westrac bailout, page-11

Westrac may be a good business but only at the right price.
As I said at the beginning of this thread..

"WesTrac plans to consume 145M in cash in 2010 and 117M in 2011. That is over 250M in cash deficit which if they borrowed (they probably could not add more debt) would leave their share holders equity at zero. It certainly doesn't bode well for paying off creditors.

Anyway put it all together and the substantially overleveraged WesTrac, which is on the verge of having negative net assets, is being bailed out by SEV."

Sev is overpaying for a business that has practically no equity. If westrac were publicly traded there is a decent chance that the equity would be selling for far less than SEV is paying for it. SEV's own experts said the same thing!

SEV will be a decent investment after this transaction but it would be a better investment if it didn't happen. It would be a better investment if it just returned cash to shareholders. Let Stokes try float Westrac on it's own.... good luck.