FGE is an example of financiers acting quickly to enforce their security to recover as much of their borrowings as possible and to stop the bleeding quickly and to stop anyone else extracting any value from the company ahead of them.
In the case of DML the financiers have been continuing to provide an extension to the repayment obligations.
I do not know much about FGE, other than what I have read recently, however the comparisons to DML are that both companies have accessible security of plant and equipment. FGE under contract to build, which becomes challenging, whereas DML owns the equipment.
Further the FGE contracts are only as good as the margins being offered. DML has the resource, which again is only as good as the margins able to be made.
One thing to note, that may have influenced ANZ's decision to send in the administrators was the Roy Hill contract.
If you look at it from a bank's perspective FGE has very challenging security, whereas DML has the plant and equipment. DML's ability to service the debt via the sale of its resource or plant and equipment is the key. However, the one thing that may be a saving grace for DML may be the remoteness and the difficulty of moving the plant and equipment as well as the recoverable value.
However, as we see from FGE, banks are quick to act to protect their security.
All IMO of course.
DML Price at posting:
4.2¢ Sentiment: None Disclosure: Held
