FSL - What's in their mind?

Disclaimer: This is not an investment advice, purely my own opinion and I do own the stocks.

Ok, so FSL decides to cut the payout ratio to 50% in FY09 3Q. This is the second cut after the cut from 100% to 73% in FY09 1Q.

What we know here is the problem, the need to refinance, and we also know the outcome, the management decides to cut payout ratio. But we do not know why they make this decision!

First all let's see what are the options available and considerations:

By cutting the payout ratio, the management seems to have abandoned the option of raising fund from investors, unless they can get strong support from major shareholders or new stragic investors to inject funds.

However, at the same time, it is also hard to see how cutting the payout and prepayment can help in the other 2 options. FSL has an outstanding loan of $509 million. By cutting the ratio to 50% from 73% (FY09 2Q), it only saves about $4 million a quarter or $16 million a year, which is a mere 3%. It is clearly not a significant internal generated fund, and I can't see if any bankers would take this as good faith, and thus improve FSL credit rating. And even if for some reasons bankers like this, why didn't they do this earlier? How can the management suddenly wake up and say hey let's cut the ratio? The inconsistency is uncalled for in a relatively simple and predictable business model.

So in summary, I see this as a move with no clear direction.