Will wait myself for the CR.
Keeping the powder dry.
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You also have to consider Synlait's stuff comes with licenses and buyers for their products. Dunsandel comes with A2 and the chance to sell in China and North Island assets come with Abbott and chance to sell in the US. That aside theres plenty of Chinese interest that would swoop in for these assets unlike forestry machinery, but of course that is the risk that these assets get sold way below their value and you get nothing. Every opportunity is there because of the risk associated, no fear, no chances to be greedy.
Well summarised, sb888 and good to see courage of conviction.
As the famous SAS motto goes, "WHO DARES WINS"!
You are a braver person than me as I still prefer the bonds at this stage and obviously will be considering the shares during the CR.
Some volume on the shares starting to go through now - all yours? :ohmy:
Bright indeed!
Here's an older article which puts Bright's involvement in Synlait in some perspective :
https://www.farmersweekly.co.nz/mark...rbulent-times/
Actually I would say the bonds are a smarter way of doing it, offering a fairly good return to compensate for the risk. Buying shares right now comes at the mercy of the CR and how much dilution will come and at what price, but if they come out of this alright then the upside will be fairly good.
Many hurdles to pass:
Loan approval - All comes down to A2 who is keeping everyone in suspense, but they don't have an incentive to rock the boat at potentially a huge expense to themselves. Doing anything that potentially causes them to lose the SAMR would not be ideal for them.
IF A2 decide to not approve the loan then Synlait will be at the mercy of bondholders and the banks. Bondholders have no incentive to call in their debt early as it does not improve the situation whether they call in their debt now or wait till it matures end of the year. They are still in good terms with their banks and the banks know Bright is there to back Synlait and there is a plan, so an extension will likely be reached with the condition of a successful CR to go ahead, since a CR would lower their risk exposure too.
Either way all roads lead to a CR we know Bright is supporting the CR so thats 39% of the raise guaranteed and they will likely absorb some of the shortfall along with other shareholders being interested to hop in, so likely will succeed. We know they have at least $130m to put into the capital raise since they will technically be giving Synalit the money to pay themselves back in exchange for more shares.
Asset Sale: Its quite clear they will be doing a partial fire sale and taking what they get offered. Dairyworks likely to be sold off for $80-100m and the North Island assets will to the very least be half sold off at the very least raise another $100m. At this point the North Island assets no longer matter in the scheme of things since they never really utilized them to the fullest and survival is on the line. Main thing is to keep Dunsandel and build back up from there.
I completely understand the share price dropping lower and lower due to the fact of the coming credit raise, however.most credit raises I have seen are announced after a trading halt is called with the CR price set from the preceding 3 days prior to the credit raise announcement etc? Because SML have been announcing they are going to credit raise and then trading has just continued? Isn’t this information material therefore will influence the share price (which it clearly is?) is there the chance the price will be set from the preceding 3 days prior to SML making their FIRST clear announcement to the market to credit raise?
One word: NO