The prudent thing to do is to wait and see what the announcement is about.
Personally, I don't think they have immediate or short-term financing issues but to execute the long-term strategy, yes they will have to raise cash-flow at some point, so why not now. I think that a cap raising now could be because they have located a partner for Admiral Bay.
They could also be experiencing problems selling Lounge Lizard, giving the economic backdrop, which isn't necessarily a bad thing. I would prefer to see them hang onto it and raise capital as opposed to giving it away for nothing.
They probably should have sold LL 12 months ago or have waited another 12 months to sell it. Hindsight is a wonderful thing. 30 mins after the announcement, the dust will settle and we will know either way...
A capital raising too is not always a bad thing. It can also have a positive effect, if the company has already been strongly sold off and if the Net Asset Value is relatively high compared to market cap. A cap raising can effectively clear out the sellers after the initial release and remove doubt over the company's future.
There could also be better than expected results for King and they want to push the start date forward (highly likely).
KZL Price at posting:
34.0¢ Sentiment: Buy Disclosure: Held
