The share price may well have held up as you will find stag holders looking to get on register for a SPP. This is not an SPP so if you want to buy 50000 @70c you would have to buy 100000 at market price now. That's not a deal in my books and I suspect that they had difficulty placing the placement shares @ 85c and the way to resolve that was to allow them to buy 50% more @70c to give them an average of 80c per share (85c times 2 plus 1 @70c) This meant they had to delay the record date to get all those on the register.
Have been looking at the AFS more closely. If one is to reconsider the company for investment I always just look again.
The positives IMO:
1. New Chairman announced with rights issue. David Trebeck will IMO do a great job.
2. Rights issue does set the company on a much firmer financial footing.
3. Bi carb plant upgrade should grow the business base.
4. Size of rights issue and fact that its underwritten helped make this go a long way to securing the opportunity for the company will probably also take the bank requirement to reduce debt from next year as that reduction will be done now.
5. The fact that's its a rights issue and underwritten means we wont have all the stags trying to dump shares into a market and trashing the SP in doing this is a really good outcome. Even a renounceable may have had a dumping effect as people buy an sell to balance their cash positions.
The Negatives IMO:
1. The rights issue is significantly dilutive. My model suggests that on taking the full number of shares that will be in issue (Today 52,963,202 shares to new 91.361,523 shares) the EPS will drop to around 10.5c from above 14c in 2009.
2. The Stock levels are outrageous at 2009 year end. It is moved from 14.5m in 2006 to 55.9m in 2009. That's up by around 300% yet turnover has gone up 21% in the same period. You can blame it on Schist and development of the mine etc but in reality a company this size cannot afford it.
3. After this rights issue I am not sure that this share can make me a lot of money. I would be a seller @90c which is a composite of 2shares @1 and 1 share @70c.
4. Dividend yield and payment of dividends has not been outlined in the announcement.
Above $1.00 right now don't know if anybody has done the numbers.
I will keep an open mind and await market moves until I see the full document.
Only a very small position.
PSH Price at posting:
93.4¢ Sentiment: ST Sell Disclosure: Held
