There isnt alot said in this thread that I dont disagree with. It all depends upon the weight you attach to all the arguements and how risk averse you are.
The quiteness of Hunter Hall (HHL) lately leaves me perplexed. They accumulated rapidly at an average price of around 38c, but are unwilling to add further at substantially lower prices. Perhaps they are one of the 'sophisticated investors' who will be injecting fresh equity into the business. They may have concluded that buying existing equity, even if at lower prices, is not going to help their cause.
I have noted a close connection between a number of parties involved currently with CDR and their past involvement with Orion Telecommunications (OTL) and its merger with M2 Telecommunications Group (MTU). For example, Ms Lacaze and Mr Allan are the CEO and non-exec director of CDR and held identical positions while at OTL. They are presumably HHL appointees. MMC and HHL jointly held 38% of OTL at the time of the merger which proved very profitable for them. Perhaps for unrelated reasons, HHL became a substantial holder within CDR on 26 Oct 07 (currently 17.8%) and MTU (now combined with OTL) on 19 October 07 (currently 10.8%). HHL acquired its MTU holding privately from the father of MTU's CEO, a Mr Vaughan Bowen. It may also be co-incidence that MMC also has a 4% holding in MTU (held alot earlier). If you add the MTU holdings of HHL, MMC and Vaughan Bowen (19%) together you have approximately 34%. A decent number of votes. I havent checked what other board members hold.
There are numerous ways to re-capitalise CDR. A reverse takeover or merger of MTU/CDR with the addition of some fresh equity by 'sophisticated investors' such as HHL and MMC is a possibility. MTU has a small balance sheet, but most importantly it has virtually no debt and offers synergy benefits. Its also a profitable firm for the past 6 years, earning double digit growth in NPAT. Its management might also be what CDR needs right now.
More likely, MTU is well positioned to acquire some CDR assets on the cheap. Either way, HHL would gain via its holding in both CDR and MTU.
Before you say it, I agree, its a long shot and I am probably seeing connections where there are none. Its just one of a multitude of sale/restructure options. I just had to tell someone just in case it comes true.
Cheers Dave
CDR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
