It will be an interesting announcement and, reading the tea leaves, I don't think there will be too much 'unexpected bad news'.
I also thought a possible 2c may be on the cards, Kasper. But as discussed in great length on the BJT thread a recent Court decision now gives AREITs much greater flexibility in determining distributions based upon their cash POSITION not necessarily their earnings. Thus, if AEU were trying to reduce debt then they may withhold.
An equity raising will be highly dilutive to current shareholders based on the probable amount that AEU would need to raise to make a dent in the debt pile ($279m) vs the current market cap ($38m). If considered by the Board it would have to be something like 2 or 3 to 1 ratio at say a 20% discount to closing price.
Thus, it may not be the prefered option from the Board and they may favour continued asset sales. However if they do opt for a cap raising, a pro rata rights issue is the only fair way to go as discussed by Mike.
For LT holders, whatever they do (rights issue, withhold some distributable income, sell assets) they must address the debt levels, which at approx 60% are/ perceived too high in this economic environment.
Shareholders will not see a full recovery in the SP until this debt is reduced somewhat.
In saying this, I like AEU and have been/ will be (pending the announcement) buying more!
Cheers John
FET Price at posting:
27.8¢ Sentiment: Hold Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)