Ann: Hills Updates Financing Facilities, page-28

Wow, so much bluster and so little substance.

Notwithstanding your intention not to reply I'll do my best to respond to a number of misunderstandings and misrepresentations you have evidently made in response to my previous posts to this thread.

1. Big W

You raised Big W here first (http://hotcopper.com.au/posts/16855906/single) in that it sells HIL product in addition to Masters and Home Timber and Hardware. When I then, factually stated, that Big W sales had been declining since FY13 you then argue Big W is insignificant to HIL.

2. Binding nature of WOW/HIL contract

You say the WOW/HIL contract is a binding contract. Correct - but that wasn't my point.

My point was who does the contract bind within WOW? Is it WOW only? Is it WOW and its controlled subsidiaries? Is it WOW and specifically the hardware and general merchandise businesses which also sell HIL product within the WOW group?

WOW might have said it won't 'wiggle out of [its obligations]' under the contract but what impact for HIL if Masters / Home Timber and Hardware is sold to another entity? Without full details of the parties to the WOW/HIL contract how do you know whether or not an incoming purchaser is bound by the terms of the WOW/HIL contract?

3. Materiality of minimum annual licence fee under WOW/HIL contract in relation to HIL product sales revenue

You also seem to misunderstand by other point on the WOW/HIL contract. All HIL has confirmed in its 21/1/2016 announcement is that WOW still needs to pay a 'minimum annual licence fee' to HIL. Surely, without renegotiating the contract in order to sell product outside of WOW, the continuation of annual minimum licence fees will be outweighed by loss of sales volume as Masters is (most likely) put through a solvent run-off process (much like what insurance companies do when discontinuing their operations).

Consideration also needs to be given about whether or not a buyer of Home Timber and Hardware (as a sale of this business is more likely than a solvent run-off) would:

• be bound to the terms of an agreement between WOW and HIL; or

• be in a position to negotiate a new agreement with HIL for ongoing supply.

If the former, good. If the later this could be either good or bad for HIL depending on the terms concluded from such a negotiation.

4.Debt facility renegotiation

Who instigated the renegotiation of the debt facilities isn't relevant to my argument.

The decision of the Banking Syndicate to convert the facilities from unsecured to secured within a 10 month period (even if you say it was at HIL's instigation to 'save interest payments' without substantiating such supposition) likely provides an insight to their thinking on the operations of HIL at present.

The term 'refinance' in its ordinary definition would mean taking your banking to another bank (just as it means when it applies to an individual seeking a better deal on a home loan). It doesn't ordinarily mean asking your existing bank for better loan terms - such situations would better be described as 'renegotiating' or 'restructuring' the existing facilities.

If HIL meant to imply from its announcement on 30/12/2015 it was working with its bankers for a restructured facility then the announcement has been clumsily drafted by management.

5. Correlation of HIL SP decline to comments on HC HIL forum

I'm sure you are aware of the maxim 'correlation is not causation.' Simply because a few posters submitted posts marked with sell sentiment doesn't make them responsible for a 25% SP decline since the announcement.

You also haven't bothered to reference your assertion that short positions have 'declined' and 'buyers are back' to any objective source of information. Looking at ASIC data from 30/12/2015 to 18/1/2016 shows short positions (http://asic.gov.au/regulatory-resources/markets/short-selling/short-position-reports-table/) have remained fairly constant throughout the relevant period.

6. Responsibility for restructuring HIL operations towards profitability

Who else would be primarily responsible for the return of HIL to profitability other than HIL management? By definition it would be HIL management. To imply or argue anything else would be spurious at best.

Your argument on this issue would be considered by most as tautological.

7. Future postings

Your posts to this thread so far appear to show an inability to grasp the underlying thesis of a counterfactual argument and, if in disagreement with it, support your opposing argument with objective fact. Your ability to sustain arguments between posts, under the slightest of critical objective assessment, displays a robustness similarly evidenced from a haystack in a tempest.

I think, WestCoast, in future you should be mindful not to resort to name-calling if other's opinions are different to your and instead develop a cogent argument in response to it.

I hope all goes well for HIL and it successfully restructures itself and the 1H16 results announcement should make for interesting reading.