CFE 0.00% 0.9¢ cape lambert resources limited

need to have a nother look ...

  1. 2,819 Posts.
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    Instead of getting all beat up about this again I thought I'd take a second look re ATO.

    IMO if that issue can be quarantined, who or what is tossing around with a thin buy/sell market will need to be a little more cautious.

    The short version is IMO:
    ~ that the CopperCo component ($41M) of the penalty is not an entirely unreasonable claim. A difference of legal opinions
    ~ that is fully deductible, will be recovered in sequel years. It looks like CFE has since that tax year paid about $20 ~ $25M.
    ~ net cash impact of CopperCo settlement ignoring penalties is about $16M out of pocket.
    ~ dispute around MCC interesting. ATO think its income; CFE thinks it is but a figment of the ATO's imagination. A legitimate debate which IMO will need to be tested in court. In a perfect world, the $16M is set aside whilst all and sundry argue the toss. In the meantime, MCC need to kick in in which case the debate is nothing more than timing.

    A resolve might look like CFE paying $41M; this will leave CFE with about $16M available deductions... in reality the ATO is not out of pocket; the debate between CFE and ATO goes on; the ATO as a gesture of goodwill waive the culpability penalties of $28M; interest is sensibly calibrated ...

    The short version ... $41M is about to walk out the door. Im not sure of CFE's burn rate but it still has about $22M in cash with which to argue the toss. Twill not be a lot of opportunity for value adding activity.

    1 less vulnerability IMO will add 10 c. The waiver of $28m crappy penalties will certainly be cause for some Xmas cheer

    Good luck.

    I've changed my sentiment ... back to hold. Hell, it couldn't get any worse....could it???

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