Hey finch. It seems we are attracted to the same basket cases....

Hey finch. It seems we are attracted to the same basket cases.

This one is interesting. From the last accounts, the "going concern" tag:

"The Group incurred a net loss from continuing operations after income tax of A$16.0 million during the half year
ended 31 December 2011 and, as of that date, the consolidated entity?s current liabilities exceeded its current assets by A$45.1 million."

$16m loss in half a year. Massive debt, although they once had a ratio of 100% debt to equity ratio! From what I can see, there's a lot of shifting money around- extending debt, etc. This one is being primed for growth, I think. A million incoming ere and there (such as the $4m coming in for part sales of the business to Scholes, seems neither here nor there- it will just pay down US debt. You probably would have read that CMA have a 22.5mclaim against John Holland. John Holland has a $16m counter-claim. These claims have been going since at least 2009, and the wording in the reports has been the same throughout the years on this. It leads me to think they may as well just kiss and make up and forget about it.

The NTA is much higher now because of the massive capital raise last year- $70m. This is the HST of the scrap metals world. KKR were to become involved but Scholes took it on- with SOL and a scrap metals dealer in support. That was in August 2011. Now, with the new equity injection from Scholes- 40c placement, not that it matters re the price), and with Scholes owning 47% of the company, it serves to pay down more debt and give CMA another "free" $1m (SCholes has merely placed shares, and then gets their own debt repaid to them). So, that's $5m coming in woith the sale and the further $1m. I guess this all assists NTA, but they still lost $16m - in 6 months?

Scholes has said no dividends, basically, but they have suggested a buyback. The company just cancelled the shares of the former head of company when a court found in CMA's favour. They now have 241m shares on offer. Any buyback will concentrate ownership of the big 4 holders. Scholes has intimated that it will creep when buying more shares- no takeover likely, and it would be hard for Scholes to take the company over as its own shares would not be able to be counted in a poll- unless it got SOL and others on side, and SOL probably enjoys a good takeover.

It's interesting to see the share price fall today. This one is very thinly traded, so one has the usual dangers there. As with HST, everyone that supported the new capital raising, has lost mountains of cash. Post-consolidation, equity was raised last year @ 40c, and now we have 9.5c. Go figure - it coulda been HST all over again- round 2 or 3 or whatever it would have been, where everyone loses.

However, this does happen to be a turnaround story, and the figures look better, but still awful, due to the massive cash injections this company has had. Also, with KKR wanting to buy in at the time, they must have seen value here. They were going to raise at 20c post-consolidation. The Scholes plan has been much better for the company.

Scholes basically own this company now- control it, at least, and it is in their benefit, as they are steel/metal people. It has breached covenants, and was lucky to come out of suspension. Of note, SGM is also at year lows. Clearly a tough time for scrap metals.

Big money behind this one, finch. But as with any controlling shareholder who wishes to creep up the register, one never knows if a lower share price is suitable to them. As to your original question, dunno. :) One for the watch list, I reckon.