Utterly disgraceful treatment of shareholders. You call a 1.30 offer undervalued and then stiff shareholders for half that.
Printable View
Utterly disgraceful treatment of shareholders. You call a 1.30 offer undervalued and then stiff shareholders for half that.
Seems to be driven by the need to take up the new bank facility arrangement to September 2026, and I would say at least in part by the need to complete the swap out in NZ of the old 3G units to 4G compatible units, which is both capital and labour intensive in the near term.
ERD states it has undertaken an independently reviewed capital sufficiency modelling exercise on its forecasts for FY24 to FY26. Based upon this work ERD expects to have sufficient liquidity to meet its capital requiements for delivering on its strategy and supporting plans to the end of FY26.
Obviously there remains quite an element of execution risk going forward and the need for ongoing compliance with the banking facility covenants. So yes, the capital raise is at a fairly large discount.
No real regrets that I exited the holdings under my control recently. I wonder if Volaris were "in the loop" here or if they were excluded by virtue of the disclosure regime. I expect the latter so I wonder how committed they remain at this point. Likely no option but to take up the rights but even so given the institutional placement they could be marginally diluted?
No one looking at this and thinking it’s really just a poison pill for the recent takeover of the company. They priced this to mess with the takeover holders, if they don’t participate they get heavily diluted and if they do they just help the company become self sufficient to fend off any need for a takeover.
Our friend Madison reports
@maddireidy
EROAD launches $50m capital raise while in takeover talks with shareholder Volaris.
Volaris comes out swinging saying they won't take part and have "several concerns" with the raise, including its price.
"We were both surprised and disappointed" - Volaris statement.
True.
However - whether it is good for share holders if they continue their journey is something we only will know in years to come. Eroad so far did drive pretty erratically and choose to sink zillions of shareholder funds in their chosen export market. If they use this new money just to throw more of it into a bottomless hole, than accountants and travelling executives might be the only people benefitting from that ...
The only thing Eroad has proven to be good in, is in disappointing share holders. Do they really need more money to continue exercising their strength?