| Subject: Re: Use this for some share based ratio work (daytrader buy in points)---info Hotcopper |
Author:
Steve Bonkers.
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Date Posted: 01:39:09 01/29/02 Tue
In reply to:
Steve Bonkers.
's message, "Use this for some balance sheet work----info Hotcopper" on 05:53:54 01/01/02 Tue
Bonkers although long, your posts are informative when all the material is read and I don't mind deciding for myself whats relevant or not..
I asked you a question a while ago in regards to net asset backing of 39 cent per share and the fact there was a considerable debt owed by ERG.
Thank you for your reply, you gave an example of borrowing against equity in a house, what if you originally commence with an equity to debt ratio of eg 35% to 65% using the house senario you own $35,000 worth of your house and borrow $65,000. The house is worth obviously $100,000 but!
a) what if the value of the house decreases, so does your equity and the debt remains the same.
b) you secure additional loans against the house increasing your debt without the equity rising and certainly not enough to cover the debts.
C) combination of a and b ie value of asset falls and borrowings rise.
Is there a way to ascertain the accurate value of assets held by ERG.
One would imagine that they would have an addition 46 mil in the bank from the rights issue, they sold shares to the value of 104 mil and Proton cost then 58.8 mil plus 75.5 mil shares which unfortunately further dilutes the shares. I think there is currently some 840 mil shares, do you know if these 75.5 mil shares are included.
IMO ERG have a huge credibility issue certainly with the CEO. He came out some time ago and issued a statement to the effect that ERG were not in any cash cris situation and shortly after that announced the Proton purchase through the rights issue and effectively raised an additional 46 mil in cash. Where has this gone??? bearing in mind the company in not cash strapped.
I spoke to S Duffy (ERG public relations) last Thursday by telephone and told him that ERG need to explain a number of issues regarding statements they make. In August 2001 Fogarty sent a letter to share holders and stated that the Group have cash and undrawn bank facilities of over $100 mil. This may be factually correct but it does not state exactly how much was cash, my understanding is once you utilize the undrawn bank facitilies this become a debt. I say that a statement such as this is misleading.
Duffy in his investor information on ERG's website stated that share issued in the rights issue were all taken up by shareholders, again that is toying with the truth, The underwriter ended up with about 20 mil which were not taken up, they may have since unloaded them on instos or sold on market.
Althought I own ERG and hope they recover, what I am saying it that its great to say we got $350 mil in revenue, but what was the profit, and where is the honesty accuracy in reporting financial matters which the market is now
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