Ann: 2016 Half Year Report and Accounts, page-20

Does anyone have any insight into the next chapter of this saga?

Despite having a refinancing facility offer from their bankers for 6 months now, strangely we've heard nothing from AKG on this subject. I note that the loans from Directors of $1.5m are extended to 31/1/2017 - only a month away now, so news should be imminent.

Free cash flow has been negligible in the last 2 financial years, so with debt to be amortised at the rate of $3.2m per year and over $1m due soon to the vendors of STA, where the heck is the cash going to come from to meet these repayments?

A rights issue is probable, already canvassed by the company with regard to the aforementioned director loans converting into shares. There will need to be a large number of shares to be issued at current prices, possibly 30 million at a guess (2 for 5) just to meet current obligations. For those of us who have little faith in management, their corporate governance, their reporting practices and their ability to create wealth for shareholders, this is potentially highly dilutive in the event of not taking up our rights.

However, it is certainly not outside the realm of possibility that a different corporate action could eventuate here, one that I have personally experienced before in similar circumstances. An opportunistic buyout of minorities by the directors and a subsequent delisting. Let's face it, the 3 directors with substantial holdings only need to stump up a meagre $5m to mop up the register at 20 cents per share. With the VET sector still reeling from unscrupulous conduct and the regulatory changes biting hard on new student loans, the outlook remains weak for domestic operations. Not a hard sell to minorities to accept some cash in light of a continuing difficult path ahead for a company laden with debt! I also note from conversations I've had with the CEO in the past a degree of disenchantment with a lack of institutional shareholder support for the company.

If this second scenario plays out, we would have only one independent director (who may not be involved in a buyout) to represent our interests.

Oh well, always worthwhile to reflect on such investing mistakes when we get to this point! Anyone else got any thoughts on the next chapter?