NZF Group (NZF and NZF010)

[COLIN]

If the market currently values NZF at $11m (or 14.5c) then what is there about this transaction that changes that value - the equity and liability are on the same side of the ledger. Aren't we then going to see the $11m split amongst 125m shares giving a price of 8.8c?

But aren't you overlooking the fact that each dollar of liability that is eliminated is a dollar added to equity? The resultant increased amount of equity is thus spread over the new total of shares.

My whole beef about this circus is that noteholders are flying in the dark, without the aid of radar, compass, GPS or even a basic sextant. Horoscopes are a poor substitute.

[minimoke]

But aren't you overlooking the fact that each dollar of liability that is eliminated is a dollar added to equity? The resultant increased amount of equity is thus spread over the new total of shares.

Its a subordinated debt for equity swap - but that doesn't alter the gross asset backing. Sure the increased equity gets spread amongst a greater share pool - but that doesn't mean the share price goes up. We've recently seen a similar swap with ALF and look where that share price has gone.