Hi Balance,
Did you see my query above:
Is that correct or am I missing something out of the equation?
Thanks,
Alan.
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Yes, I agree that is a generic risk with these things.
However, if my sums are right, the number of shares now on issue (2b or so) would far swamp the number of additional shares that would be issued if the bonds were converted.
If that is the case, then I don't think the 'narrow door' analogy is too much of a concern in this specific situation?
On the other hand, maybe my maths isn't so good??
Thanks,
Alan.
[QUOTE]Alan, A lot depends on what's happening with the share price at the time, if its rising you can do really well out of it. e.g. KIPGB just converted at the end of this June and KIP ordinary shares were issed on conversion at a 2% discount to VWAP in the previous 20 business days, (adjusted for the divvy paid during that timeframe on KIP shares), anyway I got KIP shares issued at 87.6 cents earlier this month, with the current price being 94 Bid 95 ask, not a bad conversion wouldn't you say ?
Abit like PVO, it had a dead cat bounce before it past away. A long way from the 50-60 cents. Ooops ....a certain pipe piper continues to play its pipe to the river.
I guess I just view the potential for conversion to be a worst case scenario that isn't all that bad.
Obviously the very worst case is a total fallover, but that doesn't seem very likely at this point, especially given that Westpac seem to have given them a medium term vote of confidence.
I still think that, for the bondholders (only), the Hanover deal was all upside, no matter what those acquired assets turn out to be worth.
Alan.
Alan, you may also want to consider what the bonus securites converting to new shares will do to the price, and more importnatly if they get converted before or after the debt.
An oppertunity was there for a 80% return over the last few weeks. For those with a very strong constitution. I got on board a little early myself at 4 cents, but its always nice to be back into the black. (This time with a stop loss firmly in place). Just goes to show when things get really negative there is an opertunity to make money. Where to from here? I think back down to around 4.5 cents. (What I see as about fair value given the uncertainty). But who knows another good realisation of some cash and it could hit 7 or 8 cents. Hardly exciting for those who were original hanover depositors, but exciting for those who are willing to trade this in the meantime. Prepare for a wild ride!!!!!!!!!
P.S. anyone else think that it would make sense to try and sell off the rural supplies and stock agents network. To me this is now just a distraction. ALF is not even a rural finance company anymore, in fact you could only describe it as a speculative one. Way I see it hock them off. Realise a little more cash and focus on the only way they have to add value for shareholders which is realising the best they can from the loan book.;)