The 121,525,000 management shares are actually worth RMB139M if using FY2013Q1 cash balanced (ignoring receivable & liabilities). That means the Bond issued is fully pledge at its Priciple amount, in other word, the cash is real if you trust SHK's due diligence!
Assuming no warrants was excise, the net cash after this bond issued still stand at $544M - $67M for SHK = SGD0.205 and reduce to SGD0.162 after setup the wholly owned Shanghai subsidiary.
Note: THe initial proposal of RMB250M is likely derieved from the management shares valued at NTA.
I dunno why people want to raise the worse case scenario which is "default of bond".
ok. I agree there may be a possibility but the chance of a bond default is simply too slim or nearly impossible.
Judging from China outlook, which is growing, but maybe slower pace and looking at the business strategy, Eratat is still growing. Eratat is still likely going to be profitable within the next 2 years. It is not as if Eratat will turn from a profit to loss company lor instantly.
FY net profit in 2011 & 2012 was RMB 140+ mil, and will be around RMB 180-190 mil without those renovation and cash incentive crap shit.
plus, RMB 172 (Principal + Interest) is only about 30+% of their present cash. And if warrant is exercised, it can be used to service and payback the loan.
g6everyday calculation is correct. SHK earns RMB67M within two years.
but then in Q3 and Q4, revenue and cash will still be collected. so the net cash will definitely be more than SGD0.162.
anyway, Lin jiancheng must be confident of their expansion before pledging his shares for the loans. why would he wan to risk everything he had worked so hard fr the past 30 years?
hongxing, fuxing, qingmei all having losses, but have survived for quite a number of quarters...
while so, i have to admit that I was disappointed with Eratat management that till now, there isn't a sharebuyback...
Agree with Newbiestock that default of bond will be a very 'jialat' scenario and really very slim chance it will happen. Lets just ride through the rough together those vested...
Yes Newbiestock, i agree with you. I have "written off" this bonds expenses for my analysis to get this $0.162 baseline as of today. Any warrant excised, share buyback, or even the free warrant like Heeton will be a plus.
This is a vey interesting bond exercise.... The exercised price of the warrant is set at a huge premium of 89%!!! In return, the subscription price is lower.....so either eratat don't want SHK to exercise the warrants or they are very confident that share price will break 25c within the next 2 yrs?
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