"Security holders are going to be given 10 cents cash and will keep an interest in the Redbank Power Station. As mentioned in that post, Alinta has about $40m cash held outside the lending group. That?s about 5 cents of the 10 cent payout and the rest will be paid by new investors (mostly the old lending consortium) in exchange for the rest of Alinta?s assets.
It?s a good return on our 5 cent purchase price and, while the directors think equity in Redbank is worthless and are probably right, it?s an option that could be worth something in a more optimistic market.
The securities have traded as low as 8.6 cents this morning, which I think is an excellent arbitrage opportunity for anyone with cash to spare. There are a lot of approvals, sign-offs and independent experts? reports to be finalised but I can?t see anyone knocking the deal back, especially given GPG has already given in principle support with regards its 19.9%. The 16% potential return on offer is not to be sniffed at."
AEJ Price at posting:
8.7¢ Sentiment: Hold Disclosure: Held
