glover7 Mar 2013 09:56
it strokes our egos to be able to say I told you so later on when this goes bust. LMAO.
Perhaps it is boredom or perhaps because I nearly get burnt by Hibu a year ago when I bailed at 6p from 12p! Fact remains this company will go into EBITDA negative in a few months time. The BOD is playing a gamble with lenders not getting their act together and trying to leverage the lenders. They can only do so while the trading cashflow is positive if they withhold the interest payments. They are forcing the lenders to voluntarily write off debt but the longer the lenders can't agree, the worse the cards for the BOD because soon the trading cashflow will be negative.
I suspect the lenders won't negotiate and put the company into admin and takeover the running of the company without a penny left for shareholders.
If you were a lender and you are owed £2b while the company generates £200m in income, and say interest on loan is 10% so the money is just enough to service interest with the capital not being repaid. But if you have had a few years of interest payments in, you might look at the overall loan book and say if we breakeven, we can let them off. The 09 lenders have hardly had much interest paid so they will want their pound of flesh.
The biggest problem with hibu is, even if the lenders agree a debt for equity swap, in a few months, this will be a loss making company with no sign of the BOD able to turn the decline around. What will the lender's equity be worth? They are not stupid.
You are here hoping for a swap and your shares worth something but when this is a loss making company with no sign of turnaround, it will be worth nought in the end regardless.
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