I have previously clearly articulated that
1. The goodwill figure on the balance sheet is a complete joke and the carrying value grossly overstated its real value (surprise surprise, I was dead right)
2. That the bank will be getting nervous about their exposure, (gosh substantial debt is being repaid, there's another surprise lol)
3.That operations were performing poorly and there are deep systemic issues with the business, (again no surprise that FY20 EBITDA forecast is lower, what successful turnaround plan...what a pathetic joke...how many years now have we heard about this turnaround plan, I have lost count sorry lol)
4. I was unimpressed with Norah Barlow's involvement. (She is intending to resign, that and the Chairman going are the only positives in this fiasco)
It should be clearly noted that
a) Despite much talk of their so called turnaround plan that FY20 EBITDA is materially lower than forecast FY19. (That is really pathetic)
b) This capital raise was done "in consultation" with their bankers - This is code for the bank told them to do a major capital raise or find another banker !
c) The issue price is at such a deep discount to the share price it all but entirely writes off investors original capital - WOW !
Shareholders need to ask themselves some serious questions here including
1. Why is FY20 ERBITDA still declining relative to FY19 and yet they have been talking about their much hyped turnaround plan for years ?
2. Does this indicate that the business model here is fundamentally flawed ?
3. Given that over many years various CEO's management and Directors have presided over such a massive destruction in shareholder value in N.Z. why would you trust them to create value for shareholders going forward ?
4. Given their track record here why would you back them to make a successful go of things in Australia ?
5. Why throw good money after bad ?
I expect the share price will quickly rerate down to the rights issue price and any apparent discount of the new offer will vanish.
I hope the underwriter has deep pockets and one wonders what the underwrite fee is and if there are any force majeure or similar clauses in their agreement ?
For what its worth I will not be punting on this mutt at any price.
Going on a new fishing expedition in Australia while they've made such a comprehensive mess of things in N.Z. over many years and are still carrying significant bank debt here is quite frankly gross recklessness.