I think the business of Dewitt would profitable at the local level. I just dont think that the small margins that CCC will get will cover their excessive corporate costs.
A SA coal company needs to be run on the tightest of tight corporate budgets. This company is run as loose as a BNB in terms of control of admin/corporate spending. I dont think there is a huge insolvency risk at this stage, but I do think there is a big dilution risk.
Having said all of that, their businesses are profitable at the local level and they could potentially wind up the company and probably make 20 mill or so after paying off their debt. I dont know exact figures of what they'd receive but I couldnt imagine the liquidation value of this business being heaps lower than the current market value so there might be some value in this yet.
Personally, for me there are enough suppressed SA small/ mid-cap coalers that have a good track record when it comes to corporate costs and insider owning so I would rather invest in them.
CCC Price at posting:
3.3¢ Sentiment: None Disclosure: Not Held
