Replies to post #7519 on Alloy Steel Inc. (fka AYSI)

[littlefish]

The big rub though is how to convince the Kosteckis into something like a dividend? I'm guessing they look at the company as something Gene built for them and a div is just double taxation on their asset (their meaning they majority control things). They (company) already pay US taxes even though they operate out of Malaga.

As far as I know dividends r ordinary income down under which means a high tax rate on them on top of it being after corporate gains tax dollars. That's probably one reason why they don't pay divs even though they could easily pay a large recurring div with their cash flow.

I too would love to see a divi or something since they pour off a lot of cash but many have tried to reason with the family in the past over these kinds of things to no avail so far. If U look at it from their shoes I don't disagree with them saying no to a div.

Company is clearly dirt cheap (CUO about the only thing on my radar that could compare from balance sheet and potential perspective) but the history is the roadblock that I'm guessing has this largish seller giving up.

Company still continues to operate exceedingly well in an extremely roughed up iron ore mining sector. I may revisit it soon to build back more (have always had some thinking it is worth a lot more) although they're 'dark' too as far as listing.

Thanx for all the work you've done keeping people up to speed. :)

[littlefish]

BTW I completely agree with your thinking on the recent Aussie dollar recovery and company value in your post. Something else to note, cheap fuel prices make bunker fuel cheap and iron ore exports from Western Australia cheaper in the global market and China.

China's internal iron ore production capacity has shrunk a bit with demand waning and prices so the rebound in iron ore prices may keep the bigs like BHP motivated to keep their foot down on the gas when it comes to tonnage and continued development/production volumes. That way they can squeeze higher cost producers (by keeping prices down longer) so as things get better down the road they can more quickly pick up market share if China itself is not quick to ramp production back up (iron ore). That's a slippery game to play as a business though since U would be hurting up front profitability using ramped low cost production as leverage to win market share eventually.

Of course the higher the Aussie goes the more that balances the benefit out so maybe a bit more of a transitory thing than a general market shift. And as we've seen with OPEC production to squeeze out higher cost rivals, lots of things can shift and change that aren't necessarily obvious up front.

[littlefish]

Swick, have you contacted the Kosteckis at all lately? Was just curious and haven't spoken to them in awhile. Still think a div is most likely option to try and pursue as way to recognize some value for minority holders but as mentioned probably an uphill battle due to tax reasoning/implications for family.