Circumstantial evidence only, but combined with a rights issue shortfall I think the appointment of financial advisers demonstrates that the board believes there are no more viable capital market options left to meet CNN's expected cash requirements. Instead, they want to find specific cornerstone investors or buyers to bring in some cash, as a plan B in case the next capital raising follows the last one.
If that is true, I don't like where we're headed. If we don't start generating a sustainable own cash flow, we'll have no bargaining power and any investment will be a bad deal for existing shareholders. This is assuming an investor/buyer is found at all. Problem is, given all the capital raisings so far, it seems like CNN's at a stage where it's done basically all it could do on its side, and unfortunately it's just trying to sell into a tough market whilst indefinitely burning cash.
And the fact that CNN were the ones to appoint the advisers means that there is likely to be no perspective buyer at the moment. It's too early to speculate on what sort of announcement will come next. I imagine some options are capital raising, buyout, cornerstone investor, restructure, asset sale, or administration.
I for one hope that everything I've said is wrong.
CNN Price at posting:
0.5¢ Sentiment: None Disclosure: Held
