Compelling case for an investment., page-22

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MarsC

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04/12/15

11:15

Post #: 16545548
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Originally posted by Rambo23 ↑

Some nice work there Trans and Mars on the liquidation (or more accurately controlled wind down) situation (formal liquidation would be a disaster).

I have an insolvency background so normally cringe when people just get the accounts and apply some discounts to asset values and come up with a value without factoring liabilities that crsytalise in a controlled run down.

So good to see you have factored in operating leases in there...but you have left the big one out - redundancies! In 2015 BOL made 19% of staff redundant at a cost of $4.6m so getting rid of the other 81% is likely to cost around $20m (probably more given the concentration of executives left). So that's another amount to come off your breakdown.

Also, given the constrained liquidity available under the banking facilities there is no way they could do that so a cap raise is possible while they continue to right size the business.

As far as write downs to PPE go there is a $6.3m impairment of AHFS against a carrying value of $8.8m so pre impairment of $15.1m means assets are being sold at about 58% of book. That is also a controlled situation so could be substantially higher if the process accelerates.

The situation looks very interesting and as a former top 20 shareholder (have been out now for a while thankfully) am considering re-entering. The main catalyst for me exiting was the massive decline in EBITDA from $56m to $42 from 2013 to 2014. I was well out before it dropped to $17m this year (and would have been $14.5m if profits from assets sales on previously impaired assets were included).

When I first bought in I thought the company would at least be able to stay breakeven at the NPAT level and hence maintain NTA around 50c until the cycle turned and they could really bring down debt through asset sales and the natural de-leveraging from a CAPEX holiday.

It obviously has got a fair bit worse than that. Then again, so has the SP and they are doing good work on the debt. Below 8c it is certainly interesting again. My fear is that they have gone from guidance of $20m-$30m EBITDA at the results to basically $20m at the AGM and I fear it will be lower again. Will wait for the half yearly to see where debt is and if more write downs to NTA. Then again if SP has a 6c handle then might jump in anyway.

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Rambo, It's good to have somone onboard with liquidation experience. With regards to staff liabilities in a liquidation, i would have thought that these would have been quite distinct (and substantially less) than redundancy costs for a going concern. But i may be wrong.

Last edited by MarsC: 04/12/15

BOL Price at posting: 7.8¢ Sentiment: None Disclosure: Not Held
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Last 14.0¢		Change 0.000(0.00%)		Mkt cap ! $60.80M

Open	High	Low	Value	Volume
14.5¢	14.5¢	14.0¢	$18.98K	135.1K

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No.	Vol.	Price($)
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Price($)	Vol.	No.
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No.	Vol.	Price($)
1	60000	0.155
3	135000	0.150
2	106896	0.145
2	59500	0.140
2	37700	0.120

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0.160	45000	1
0.165	167376	3
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Compelling case for an investment., page-22

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