anyone have a view on the debt transfer, page-4

Bottomfeeder

"why would Merrill want to take on such an insignificant amount of potentially distressed debt of less than $8m?"

They probably bought the debt at a discount ....

"Have you any idea what they mean by the transfer being by novation?"

Novation means that one lender is standing in the other for the other with no change in the terms of the loan for Redbank. (It is a bit like buying a bond.)

I suspect that the proceeds paid by Merrill to BankWest was something less than the $8 million par value. If Merrill picked up the loan for $5 million, it would give them a running yield close to 14%! (That assumes an 8% fixed rate and duration of 5 years.)

There is the incentive for Merrill. As for BankWest, they get to write down a loss against income in a good year.