Like to start a healthy debate on the options that KZL have at the moment to raise enough money so their short-medium term survival can be assured.
A heavily discounted capital raising would surely be very difficult. Would investors pump in money into a company that is shelving its projects (and possibly seeking to firesale its assets).
There is mention that ANZ may want to convert their debt into a hybrid instrument so they may be able to take an equity stake in KZL in the future. If this was the case I assume that this would have been done already. The fact that KZL is in trading halt (and I see a suspension possible coming up) means that ANZ juts wants their money back.
ANZ may extend the maturity date for KZL with penalty clauses attached? If this was offered I am sure KZL would have accepted this already.
Joint Venture partners stumping out cash to save KZL. If the JV partner can put more significant cash into KZL I am sure they will be asking for some handsome terms and conditions ... I know I would. If the JV partner ends up taking a huge equity position in KZL then FIRB approval would be needed ... and this could mean 4-6months timeframe which KZL may not have.
Fire sale of assets. This seems to be the way to go to avoid dilution. Only thing is that Lizard Lounge was talked of being worth $250m+ (even $400m) then sold for $68m (say $62-63m net after transaction fees and misc costs). Firesale of assets would probably mean any asset may only realise 20-25% of its "potential worth".
Fact is, even if KZL somehow get enough money to stay afloat and assuming they will have to mothball operations short term, wouldn't KZL need to raise money again when they wish to restart operations?
Things look bleak for KZL but there are options which it can take. I mean at least surviving is better than going into administration.
Any other opinions? Love to see the views of others.
KZL Price at posting:
12.0¢ Sentiment: None Disclosure: Not Held
