Yippee ! $5 m raised at 90c a share. "Contango will be debt free,with capital for expansion". So the blurb goes.
Ummm, lets see.
$750k debt. Therefore, to be debt free, $5m drops to $4.25m.
At current cash burn, CGA is $500k a quarter cash flow negative or $2 mill a year.
Therefore, if we ignore the intensity of the blurb of the announcement ( where there is zero mention of plugging the current cash flow shortfall identified by the ASX), and assume half goes to growth.......then smidgeon over a one year before cash flow dire again.
Message- CGA needs to perform, get fum in, and control or reduce its cost base. FAST. Pronto! At the same time, CGA needs to protect its high fee crown jewel mandate CTN from the clutches of GW. And its lower fee insto mandate, Maritime Super - a loss will not be good for CGA's reputation.
Fundies work in a stressful environment, as the market, she is never a kind mistress. With all these added pressures, CGA fundies and portfolio managers and analysts - boy, they will really be under the pump.
CGA Price at posting:
92.0¢ Sentiment: None Disclosure: Not Held
