barnyi made a detailed study of the CIX tax losses about a year...

barny

i made a detailed study of the CIX tax losses about a year ago . . talked to very senior tax consultants on this one.

in fact, the tax losses are highly unlikely to be of value to an acquirer. to utilise tax losses you need to be able to satisfy one of two tests - "continuity of ownership" is one, "continuity of business" is the other. CIX currently satisfies the continuity of ownership test but as losses were incurred when it was a reinsurer but now is an insurer. . it does not satisfy continuity of business.

if the company were to be taken over it would cease to satisfy the continuity of ownership test.

therefore - CIX delivers around 70 cents of value to an acquirer. . . not $1.00+. Companies like QBE, MBL with substantial offshore earnings clearly value franking credits.

However, any takeover would appear to be at a discount to 70 cents. a bid at 50 cents would create value of around $40 million for an acquirer which can use franking credits. . that is the sort of level where i reckon that a bid is possible. . . but only if the board is prepared to agree to bid. nobody is going to bother going hostile / possibly failing for a prize of this size.