I may think SCF will survive ... but someone putting in $100m KNOWS SCF will survive.
Printable View
How did you arrive at this?
If you followed Basel captial adequacy rules:
$100m to 80% is a total of $125million equity - this can fund a very conservative 8 times 100% - 150% risk weighted assets ("first mortgage" style). Hence the asset value is, as a conservative estimate, is in the range of $750m to $1billion. We have heard Sandy talk about the "Good Bank" being funded by $1billion of debt - so this is consistent.
Refloating the "Good Bank" with new equity means that the equity assets are no longer required to maintain the capital ratios. This means that they could be traded back to Southbury, for example, thus healing some of the Trust Deed covenants on the ratio of equity assets to total capital.Quote:
Originally Posted by CJ
Further, a refinancing of the "Bad Bank" assets (most likely a sale) removes heavily risk weighted assets from the ledger and adds cash to the capital structure. Very good news for the core ratios.
There is no question of insolvency. SCF is not insolvent, now - the structural change does not create any insolvent parts.Quote:
You say there will be three entities that come out of this , good, bad and equity. Which one will be the surviving entity? If they sell off the good bank, then the equity, you are left with debt in the bad bank which may or may not be insolvent.
As I recall the deal was going to be done by AH by the end of June. Then there was speculation the end of July might be more realistic. Sandy has talked about the end of August and we have talk of it being done when th full year accounts are signed off. Holder s will have a while yet to wait.
Was that the esteemed Enumerate on TV3 News tonight? What odds?
M
http://www.3news.co.nz/Hubbard-suppo...6/Default.aspx
Not me ... he is one of the two guys running the facebook page. The TV3 coverage does actually cover some of the broader story.
Thanks - so if it has equity of $125m after a $100m injection, then it is currently worth $25. I was referring to equity, not total assets.
Going further, you are saying there is currently $1b of 'assets' supported by $25m of equity. So a 2.5% impairment wipes out the current equity since the debt of $1b stays constant. I admit I dont fully understand Basel so I could have this bit wrong.
I believe you're on the money mate. There's so many new increases to existing impaired loans that no-one wants the bad bank. Then there's new impairments on the "so called" good bank over the last six months of recession conditions.
Even if a potential purchaser has the balls to buy-in they then have to run the business in, shall we agree, "an extremly challanging environment" facing the near term prospect of no Govt Guarantee...good luck to them and their $100m I reckon they'll need it.