SML - Synlait Milk Ltd

[Lego_Man]

Although YTM is irrelevant now, basically we're talking about impaired asset valuation. So Bond Price = Probability of Default x Residual Value after haircut.

So this market is saying at a starting point at 60c on the dollar for the bonds, 100% chance Synlait defaults, and in that situation investors get haircut by 40%. Or any combination of a lower default probability and higher haircut rate.

What's the fire sale NTA you reckon versus the debt load?

[Toddy]

That's the million dollar question and why there should be a trading halt.

The banks just want their money back. Bright and A2 have had a plan all along.
With no farmer base to supply milk, then you can guarantee that the bond holders will take a massive haircut and the deal to current shareholders will be like swollowing a dead parrot.

[Newman]

Why is this not in a permanent trading halt while it's sorted out.

I guess Bright Dairy and A2M do not want a trading halt. The share price's continued fall could help them negotiate loan terms and CR conditions.

[Lego_Man]

That's the million dollar question and why there should be a trading halt.

The banks just want their money back. Bright and A2 have had a plan all along.
With no farmer base to supply milk, then you can guarantee that the bond holders will take a massive haircut and the deal to current shareholders will be like swollowing a dead parrot.

Yep - the market is saying that the company is not a going concern. I'm torn, as investors should still have the right to speculate whether this is the case or not.

[Toddy]

Yep - the market is saying that the company is not a going concern. I'm torn, as investors should still have the right to speculate whether this is the case or not.

I wouldn't believe the market in this case. It's not informed and even the experts cannot work out the end game.

The attitude all along has been one of 'it's too big to fail'. It's not going to fail, it will just have new ownership at penny's in the dollar.

[Newman]

Bonds ended @160%.

[Newman]

I believe Synlait will make an announcement next Monday, the interest payment date. As the Chinese Premier has finished visiting New Zealand, Bright Dairy should have sorted out the loan issue.

[Toddy]

Bonds ended @160%.

Fair enough. Load up the proceeds on the Warriors at $1.90.

Decent ask volumes at that price too. Maybe an informed investor.

[nztx]

What would a Corporate undertaker's party yield up ?

Who would likely wind up on the ropes & who would be seen disappearing into the distance
dragging the prize - even as a joint effort to run & hide ?

Even some deeply discounted bonds being waved to throw on the fire to further drive the negotiating points home ..

[Bikeguy]

The Chinese (Bright) have massive financial resources and 500 mil is nothing to them…the big question is how they are going to play it, fair or turn the screws to take advantage of the situation?
Many of their farmers will have shares in SML and I believe Bright will be very aware of this fact…hurting them is not long term smart,