What are they doing?The forecast "run out of cash if they don't...

What are they doing?

The forecast "run out of cash if they don't sell at least 428koz in the September quarter" turned out to be accurate. However I'm confused as to why they went with a $3m loan, repayable by 31 December as the solution.

This just means that the $2.5m due to the CBA and the $3m due to Magna, both fall due at the same time.

Even if CCU manages a positive cashflow quarter (which would be its first ever), there is no way its going to be a $5.5m cashflow positive quarter .... regardless of how sunny your view may be on CCU reaching nameplate production or the POS.

The only action more confusing than that of CCU's management is that of Magna's management .... I think I've realised too late that Magna is not a "smart, generous institutional investor that lends confidence to a retail investment in CCU" but rather just "a bad investor" ...

Come December quarter end, when CCU uses the Magna money to pay back the CBA and therefore can't pay back Magna, the loan will need to be converted to equity, frankly at whatever price Magna wants. The dilution would be significant under this scenario.

I'd love to hear how this doesn't happen ...