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Borders I was going to buy some SGH but found to my surprise that HSBC Invest Direct do not support dealing on ASX. Now a few months on I quietly whisper to myself 'thank you HSBC for being so restrictive'. Current press releases on SGH and their Financial Staff situation clearly indicate that they are heamoraging cash, big time. 2015 Quindell style, even. Which goes to prove (conclusively IMHO) that David Currie, past Quindell Acting Chairman, current Quindell Non-Exec Director, made a correct move in managing the sale of our Legal Services Division. And saved this company from a certain SP=£0 situation. ATB, P
Borders, our Posts crossed in the Ether. I somehow knew you would appear. I truly believe that SGH is a good share to buy NOW, clever in hindsight. But clearly it wasn't a good share to buy four months ago, when somel thought that they had 'such a good deal on PSD from Quindell'. They will be a great share to own in two years time, if you buy a few shares now. But share owners will not be so happy if they owned their shares prior to Q2/2015. It would have taken over two years to go from A$6.5 to (guess) A$10 ish. Quindell isn't the only company that screws up. ATB, P
Phrontist Any irriot could see that the QPP inherited WIP would suck in cash before it spat it out again. It is the same in any business which increases its work in progress. (an extreme example- Imagine building a dam - all it does is suck in cash until it begins to generate cash ) Key here is that SGH has arranged funding to see it through ( and we assume QPP had been inept and had not) . If SGh's plan is to scale back a bit ( 10%? = £30 M cash need reduction) volume throughput, it can assume a contribution to profits of around £150M, less finance costs, over the next 2 years from QP's WIP. Remember SGH has its original profitable trade. Eddison is predicting an Earnings per share ( ie after all costs and tax) increase of just short of 90% in 2017. I am a dutchman if SP does not treble sometime in 2017. My point all along is that QPP could have scaled back by shedding some of its WIP - arranged expensive short trem mezzanine finance /bank or bond funding .......and worked through the WIP to profit and cash generation. Even if the plan had been to shed PSD in time, it would have been a far stronger negotiating position if the sale had been delayed by a year. So then .....ah but it was in trouble and mincing towards liquidation I hear y'all say. Trust me - as debt clearance post sale was only £35M ( although a bank might have played awkward) there must have been options for financing a couple of cash flow. If QPP had had £100M debt the bad bit might have happened. It didnt and financing QPP through the lumpy WIP would have had a much quantum of finance than SGH had to find. Mel
Sorry much lower quantum of finance than SGH had to find. Mel
Phrontist It somehow was obvious that shorters would pick on the marked increase in debt and drive the SP down. U are right......I rejected the notion of SGH until the shorters had had their evil way. Mel
Mel I think what happened is this. Coming into 2014, growth of PSD was considerable. RT used this information to inform the public of impending massive growth in Sales and Profits for 2014. SP would remain high throughout the year, even continue to rise well over £6/share. Quindell would issue a second Rights Issue in Summer 2014 to continue financing the growth in business. Company would reach 2015 with good set of Books. SP holds good, everyone is happy. Risky way of doing business, but a successful outcome brushes that under the carpet. Why did this fail? Gotham City 'Report'. After that saga there was no chance Quindell could survive. As for your belief there are people out there that would lend such vast amounts of cash to a company that had covered up the (full) truth, that is for the birds my friend. Some may speculate that Gotham and RT deserve each other and should crash to earth and die. Unfortunately, like most wars, the innocent and loyal shareholders were the ones that suffered. Gotham and RT both seem to have got rich on it. They have our money. ATB, P
Excellent summery of events makes a change from reading dross,we have to trust that the board made the only choice possible.Could we have borrowed money to see us through having had £200,000,000 via institutional investors who knows.Lets see if the new ceo can dust us down and build again ps I'm sick of seeing sgh adverts on TV it pains me.
Phrontist Just look at the massive debt SGH has arranged. QPP needed a small fraction of that for 18 months. With the new probity types on board, which hedge Fund would not have offered additional £40m lending ( with an interest and equity bonus giving return of 30 %) £13 M cost of banking £150M conribution to profits over 12 years - trivial. £1b market cap - almost certainly. Shorts back off and take profits when weknesses are dealt with. mel
Mel PSD brought Quindell to its knees and now its bringing Slater & Gordon to their knees. Why? A gross underestimation of the finance required to handle cases taking longer than planned, and with no guarantee of a pay-out at the end. This is a problem with pay-if-you-win legal practice. When you're losing you just pour in more money to try and win. This type of USA-originated Legal Practice was actually against the Law in the UK until fairly recently, it is a whole new ballgame. It seems to me to be strange that if you ask a solicitor 'what percentage do you win?' he replies 50% over time. But if you ask PSD supporters they assume 100% over time. Cuckoo land. No one in the UK is going to finance such a dodgy business strategy. I for one trust David Currie's instincts on the decision to sell PSD, very smart move. As some pundits commenting on Quindell last year said, 'your business is built on sand .....'. Not any more. ATB, P