year of the rat , page-29

Response to chaos -
the current situation....

Sell and Sit
for ONE YEAR,


ok....postpone Year of the RAT !

N.B
Where will the credit crunch situation,
and resulting valuations be by then?

What accept, and
expect the unexpected!





> Decisive action is required to improve the liquidity position and reduce the risk profile of RAT. Key initiatives include:
> Unwind of existing FX hedges: To date the hedges have protected security holders' returns against the strongly
appreciating Australian dollar / higher interest rates. RAT intends to progressively unwind its FX hedges releasing
approximately A$20 m in cash. Security holders will then be fully exposed to any movements in the AUD:USD exchange
rate, including any retracing from its recent highs which would improve returns in Australian dollar terms. Once the FX
hedges are fully unwound RAT will not be exposed to the risk of margin calls due to adverse exchange rate fluctuation
> 100% retention of earnings to preserve cash: RAT is expected to earn approximately A$30m in free cash flow over the
next 12 months. Rubicon believes the interests of security holders as a whole are best served by retaining these earnings
instead of implementing a DRP or raising new equity at the currently depressed stock prices
> Asset sales: Rubicon believes that RAT can sell approximately A$600m - A$800m in assets at a fair price over the next
12 months. Over time, the intention is to eliminate RAT’s exposure to CRE loan assets through a combination of
repayment by borrowers and sale of loan assets
> In total, these initiatives are expected to raise in the order of A$200m - A$250m (net of senior debt). Net proceeds will be
deployed in the following sequence:
> Repayment of short term debt
> Buy back of up to A$50 m of securities in order to close the gap between stock prices and NTA (currently 3.5 times ASX
market price)
> Once the initiatives are successfully implemented:
> RAT's gearing will be 55% to 65%
> EPU is expected to decline in the order of 20%-30% (before impact of buy-back)

> It is expected that distribution payments would recommence