I seriously doubt greentrains is an issue now. The banks should support CXG. As long as greentrains is cashflow positive, it should not be a real issue.
In case investors in the small end don't notice, when you get growth (or an inkling of growth) back into the economy again in the short term, the debt won't look so bad. AIO has been in vouge lately on the back of potential acquisitors. From that experience, you can understand how debt is a magnifier of equity value on both the downside and upside.
CXG has been hit hard on the back of their debt load, but debt is a magnifier of equity value when the market gets confident again. As long as CXG is still making an NPAT, they should be fine. Cashflow positive companies OK.
What management should do is to provide regular trading updates on the company. The lack of newsflow is causing uncertainty in the market, hence getting reflected in the share price.
Keep a look out on the engineering space <$150 million. I believe rational consolidation is due and companies <$150 million will have to join up for scale or be taken out by larger companies. It's already happening with the likes of GRD Minproc (ASX: GRD), Austin Engineering (ASX: ANG) & Norfolk (ASX: NFK). Once you get some deals through and the market starts to realise that, companies like CXG will get re-rated quite significantly.
Call me biased because I am an investor, but those are my views. I believe in rational thinking and discussion.
Happy investing.
CXG Price at posting:
23.8¢ Sentiment: Hold Disclosure: Held
