In terms of accounting policies, firms using the last-in, first-out (LIFO) inventory costvaluation are more closely matching costs and prices in an inflationary environment.
Blue Mountain expects that valuation to converge toward replacement cost, which could carve more than 80% off the share price of the Australian equity.
For instance, if the company looks to raise capital in debt or equity markets in the future, the new structure would allow investors to derive different growth and cost of capital assumptions leading to a higher combined valuation.