Where is Denbo?, page-45

Tumbelroll

This scottish guy from Melrose agrees that HL cases are causing a problem . They are sucking in capital and increasing debt.
SGH gets $40m net profit before interest by june 17..........and by june 17 HL cases will be all but gone and debt associated gone too
with $40 M PBIT banked. Whether that is worth paying nothing for is amoot point because even if SGH has a good idea about outcomes, they cant tell us because there is no past data or statistical proof. So it is a problem. A problem with $40M profit before interest and tax outcome. In my book a minor problem,

If you remove HL from the thinking and balance sheet , the rest of the business is easy to understand and past stats can prove to within 95% how the business will then be financed and how profitable it will be. SGH paid 6.3 times PAT for that . DIRT CHEAP!

I have some expertise and first hand experience in Leveraged Buyouts. I know the dynamics and drivers to look for to be able to see the factors for success.
LBO's and LBO partnerships have been out of fashion in the N Hemisphere for 8 years because banks here cant play. European govts have squeezed the pips out of bank ratios so banks wont divy up the leverage. Australian Banks , like Canadian Banks have not had quite the same constraints. Since SGH is australian and its bankers live with Oz rules they have come up with leverage for the underlying QPP business purchase at a low PE 6.3.......and I guess , a form of bridging loan , to deal with the HL cases over the 2 yr period June 15 to June 17.

Any student of leverage will know that in the right context and measure, leverage is VERY good for the equity holders in a growth path.

I am a tad bored with the arguments here. I have 2 small businesses to run , am about to get busy but in my book , when the HL cases stop clouding the issues, SGH has got it all and Grech will probably come up smelling of roses. Whether he is the man with the strategic width of vision to take it to Oz top 100 / Ftse listing....time will tell. I don't have any other shares which could increase in value as much as SGH.

Of course I am not inside the bunker and only time will tell. In the meantime HL provides the weakness to get the shorties out to play.
When the weakness is gone.............

Mel

PS Mighty Atom - he me? He should take that as a compliment. Bet he cant speak any gaelic though.