all over red rover, page-59

Zwu - It was just a suspicion that the banks may be thinking this way, but maybe not. My guess is that with all of the forestry land on the market why would they push for liquidation now rather than let the company try for a deal? We know GNS was interested in FEA and if the new GNS plantation entity gets outside capital then it will want to buy more assets. Who better than FEA for GNS plantation company too buy? (if they have money) But if the banks let FEA continue then maybe they lose control of this option as management may get in the way. Just a thought....

From the banks perspective the numbers look like this for FEA;

Bank Debt 200m
Forestry Land 300m (at book value)
MIS loans 70m
plant 117m (inc new sawmill)
equity 291

The banks are not going to lose any money on FEA given their first ranking charge on forestry land and plant. MIS liabilities are not relevant to them as they have a charge over fixed assets and rank ahead of any potential MIS liabilities.

I suspect it would suit everyones interest for GNS to take over the land and MIS business from FEA. It is just a question of whether GNS can complete restructuring and get outside funds. If they cannot then no deal with FEA will happen but if they can then suspect it might happen.

Just some thoughts.

As for shareholders losing all their money, well with equity of $291m the assets will have to be written down by a massive amount for that to happen..but even if we write down assets by 50% shareholders will still get some back...I am not thinking that would happen but that is what the numbers suggest at the least....interesting to see.

Lord