Ainsworth uses new credit line to pay off old one
Ainsworth uses new credit line to pay off old one
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This may not be a perfect example of robbing Peter to pay Paul, but it’s pretty close. Ainsworth Game Technology has had a couple of difficult years, seeing a drop in its annual performance in 2019 before 2020 brought further losses due to COVID-19. A filing (pdf) it just submitted to the Australian Securities Exchange (ASE) indicates that it has received a new five-year credit line worth $35 million and, while that could be viewed as potentially good news, closer examination proves otherwise. Ainsworth is using the money to pay off another credit line it had.
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The rule against penalties – a primer
For well over a century, commercial parties have stipulated liquidated damages clauses (LD clauses) in contracts to avoid the cumbersome task of assessing damages payable upon the occurrence of an event, typically, a breach of contract. However, such clauses risk being unenforceable if they flout the rule against penalties. The courts in most Commonwealth jurisdictions (including Singapore) have traditionally regarded LD clauses as penalties that are unenforceable if they do not represent a genuine pre-estimate of loss, and go beyond compensating a party for its loss.
This approach reflects a judicial policy of ensuring that parties do not ‘overreach’, and has its roots in Lord Dunedin’s judgment in
All of these globally dominant companies are listed over in the United States and yet command a market presence in Australia most ASX companies can only dream of.
And Aussies have taken note. Many ASX investors are now seeking to fish in this far larger pond and add some international diversification to their ASX share portfolios. And today, it s easier to invest in US shares from Australia than it s ever been.
How are the US markets indexed?
Aussie investors would be familiar with our 2 major market indexes on the ASX the
All Ordinaries Index (ASX: XAO). These are very simple in nature the ASX 200 tracks the largest 200 companies on the ASX by market capitalisation. The All Ords does almost the same thing but tracks 500 shares rather than 200.