Yes, developers. But the source of funds is the difference.
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That was true until they started loading up on debt to develop ever bigger projects without presales.
The development market has turned and the RVs have been caught with expensive land and unsold stock - funded by debt.
I suspect many RV investors have never seen a development property downturn before. They all start with developers buying and paying for ever more expensive land.
Sp action - retail buying and institutional selling. Who have the bigger firepower?
I would suggest that a CR would devastate the SP. They would have to make it at 60 cents. We all know that the SP on the market would drop to that. Not the right time for a capital raise and I believe the Directors know that. I dont see a CR being considered.
They have a bank facility, and with a MCap of 1/2 billion even at this low SP, that draw down will be the way to go. They have plenty of equity and the drawdown will be no trouble. I also think that they will stop any further development that hasnt already started, perhaps sell surplus property, and as a last resort cease dividends for a year. The latter will also devastate the SP down to 60 cents as well, so it will only be as a last resort.
So much speculation and doom and gloom. Thats what has made the SP what it is. Lets wait for the next result, I think we will be pleasantly surprised. Note also that continuous disclosure rules require just that "continuous disclosure" so any material events have not surfaced and not likely that they will.
When Legend Balance puts down a negative comment the SP drops by a cent or two. Shuddup Man. LOL or more negativity so I can accumulate more at 73.
I can see the CR being done at 50c if the directors do not move soon.
The banks out there are limiting their exposure to developers, be them residential or RVs.
Have a look at OCA’s debt profile over the years - you can see it climbing higher and higher year after year as the company embarked on its aggressive growth program. Similar with all the RVs really.
Remember how Ryman’s sp kept falling until the CR?
Where was the continuous disclosure?
Don’t rely on the CD regime to tell you what is going on!
I warned about Ryman’s CR well ahead of time and a few posters wrote that I was smoking something!
Another (panda-NZ) wrote they should do a share buyback using debt instead!!! Not surprising with panda-NZ as he lives in Labour’s fantasy world of money appearing from thin air, not hard work or savings.
$230m of debt headroom still available not enough?
A CR does worry me, as it will worry every shareholder holding the Market Cap of 1/2 billion. Just about half of what it should be. The Directors would be committing corporate suicide to do that at this stage of the SP. I think there are other ways of holding off on development costs and expansion. I am not panicking YET.
Drawdown of debt facilities is subject to a company meeting negative pledge covenants on a continuous basis. That’s how Ryman still got into trouble despite having undrawn debt facilities.
Property values dropping combined with negative cashflow from operations are a bad combination when it comes to continuous compliance with debt covenants.
Anyway, I am simply imparting my experience from years of dealing with developers and banks. Take it as one person’s view, correct or incorrect.