Now... I'm not saying that MSC is great... but I can read a set of accounts (and understand what I am reading).
Perhaps you should look at the accounts a little closer... there is not $112m of debt. In fact there is nowhere near $112m of debt. There is c.$86m of "debt", offset by c.$41m of receivables, giving a net debt figure of c.$45m. The balance sheet is artificially overstated due to the sale and leaseback on the plant done years ago. A large amount of the debt is project specific or convertible notes.
Also, post year-end ACC raised $5m in equity (cash) which is not shown in the consolidated accounts. Therefore the June accounts don't really paint an accurate position of the business. Either the cash is still there, or it has been used to reduce the liabilities shown.
The rights issue will be used to pay down debt.
The biggest risk with the rights issue is if an underwriter does get involved, they may get a very large stake for a true discounted price without having to pay any premium. If someone wanted to buy 500m shares, the would have pay a huge amount to get the volumes and would need to disclose their buying. By underwriting, they can get them in one go, without paying a premium.
Will be interesting to see what happens, given the MSC announcement said they are looking at underwriting...
Regards Marvin
MSC Price at posting:
1.6¢ Sentiment: None Disclosure: Not Held
