Other formats

    Adobe Portable Document Format file (facsimile images)   TEI XML file   ePub eBook file  

Connect

    mail icontwitter iconBlogspot iconrss icon

Salient. Official Newspaper of the Victoria University Students' Association. Vol 44 No. 9. May 4 1981

Why so high

Why so high

The decision to increase the guarantees seems clearly unfortunate when viewed in today's light. The justifications at the time were:
(i)if the guarantees were not increased by those who had already given guarantees, the guarantees already given would be liable to be called up by the bank, as they would realise there was no hope of ever getting even a significant part of the overdraft guarantees;
(ii)the company had just recorded a profit of some $22,000 for the previous year and there was every indication that the losses would be recovered according to the previous timetable (this would have involved the guarantees being released by the early 1980's).

The fly in the ointment is that STB did not continue to trade according to anticipated patterns (which included projections by Wilkinson Wilberfoss). The profit in the following year was a scant $6,000. It now seems highly unlikely that the company will be able to return to its former profitable levels without a substantial increase in the ISIC price.