Interesting theoretical maths. I think the real issue is one of urgent pragmatism rather than accounting semantics.
The company's view of equity may be whatever the current IFRS magic tricks allow but shareholders value their equity (shares) at $15m. In particular there are probably different views of what the schist is worth in a storm.
If shareholders thought they were worth more they could buy some cheap.
This $15m number is important because it limits the amount the company could raise in an emergency via a discounted placement of 15% of their stock. Even at a zero discount with no raising fees they could only raise 0.15 x $15m = $2.25m. That's not much of a buffer in an old, heavy industrial plant with many potential breakdowns.
With shareholders valuing the company at $15m and banks already $80m down the hole I expect the banks will be reluctant to tip in much more.
So we have a cashflow negative company with negligible ability to get more debt or equity. Repairs to the kilns are required and litigation is underway.
I admire those of you with the vision to see the upside in this. If you take comfort from the wisdom of directors buying have a look at what price they paid. If you are waiting for employee layoffs as a harbinger of doom it won't give advance warning as they are probably already down to the minimum to run the plant. Layoff day will be closure day.
Bacci
PSH Price at posting:
15.0¢ Sentiment: Sell Disclosure: Not Held
