Sanctuary Group: Sink or Swim?

My opinion is that the company was forced to call that EGM by its articles of association. It had no choice. The fact is that the company has been authorized to borrow more which is bad, but if you are an equity holder facing dilution to sub 1p by a rights issue or d4e, what do you have to lose?

SGP is in the hands of Hbos at this time imo. I believe they have the right to recall their debt and put SGP into administration at any time. The only way SGP can avert this is by convincing them trading is going to improve substantially next year. By its nature, revenues are very lumpy and there is a lot of risk attached. Some of the newer stars are here today and gone tomorrow. Banks don't make their money understanding or making those sorts of calls, they make their money on lending.

The alternative compromise would be the d4e/rights issue, neither of which are likely to be paletable to equity holders. EIther way, these are likely to be so dilutive the SP should trade sub 1p, an almost 50% return from here.

B