If I were to point the finger for 'leaks' or 'corruption' ... I'd probably call it 'criminal' behaviour, well it would probably be at the 'potential investors' who were called up by the advisor on the 22nd/23rd Mar to register their interest in taking part in a cap raise. WBT management had nothing to gain from dropping the price 20%, so why would they facilitate such an outcome. And the advisor/lead manager is closely regulated and would be silly to do such a thing. So the most likely party involved in the process are the 'potential investors', which likely included some hedge funds who have the deep pockets and you guessed it, are the main culprits when it comes to shorting.
Management could have done a better job don't get me wrong. And in hindsight that is easy to see. But this may be the catalyst they need to strengthen their team even further or add to their Board, bringing in someone with more capital market experience who can ensure this doesn't happen again. WBT was cruising around in a lake for a long time... they've now ventured out into open water, so they need to smarten up. I dare say we'll see some additions or changes to management/Board this coming year to manage this better going forward.
But I tried to put myself in WBT's shoes and here is how I think it may have played out....
If you look at the response to the ASX query, management engaged the advisors for a potential fully underwritten cap raise of $Xm on 8 March 2023.
At this point the share price has just closed at $7.90 and management thought they would try take advange of the strong re-rate and raise capital to secure their funding for the next couple years so they can focus on what they've been doing extremely well at for the past several years since listing on the ASX.
Nothing is locked in at this stage and WBT are not committed in any way. The advisor has probably given them a ball park figure based on a 30 day and 60 day VWAP that at that stage sat around $6.40 and $5.30 respectively, which you would then have to discount around 15% for a fully underwritten cap raise.
So at or around 8th March, management may have been guided on a potential raise in the vicinity of $4.50 to $5.44.
Investors are looking at ballpark $8.00 and saying why couldn't they have raised at that price... well quite frankly nobody would take part in a cap raise at that price, especially after such a recent spike. And yes management could have waited 30 - 60 more days and waited for that VWAP to go up, but they also run the risk of the share price taking a hit due to external factors (black swan event, market crash, financial crisis where liquidy dries up) or internal factors such as a qualification delay or issue arising with skywater.
So if one of these events do occur in the next 30-60 days and WBT goes to sub $3... this cap raise at $5 will look like a master stroke.
Back to the reponse to the ASX query, based on what WBT have said.. tand based on that, on the 22nd Mar when the price tanked and shorts had a field day... WBT did not know what the final price was or how much they could raise... so they had nothing to leak. All they saw was the price starting to tank and their first course of action was to try figure out what was going on... and from what they could tell, they were not aware of any leaks. Should they have halted anyway knowing 'potential investors' were being called that day and undetected leaks may have occured? That's a firm yes. And in hindsight I'm sure they would have done so, but this is probably their first run in with such a vicious short attack and were clearly unprepared. But not criminal or corrupt behaviour.
Now WBT were not advised of the final price until 5.30am on 23 March which was after the stock was halted by the ASX. So again, they had no firm details to leak before hand. The lead manager would have told WBT at 5.30am that they were willing to underwrite a $45m placement at $5.00. Take it or leave it. The Board took it at 6.30am on 23 March, quite possibly because it was within a range previously provided as guidance .. where I came up with $4.50 - $5.44 based on 8 Mar 23 data, when they first considered a cap raise.
All this definitely sucks and retail holders are the ones who get hurt most... but WBT is still a $1bn company and about to go commercial with less than 200m shares... everybody makes mistakes and WBT management should have done better, but if they continue to deliver on hitting their milestones where it counts (they should really be focusing on running the business, and not so much the share price)... then surely that is what really matters in the long run.
For me, their integrity was tainted and probably moreso the fact they made investors believer there was no cap raise in the short term and then drop one on us, which I suspect they'll attribute to the fact that they wanted to take advantage of the strong demand for the stock & potential risks ahead ... but that is a lesson for all retail investors... never say never when it comes to a cap raise! and if ever, doing it when your at all time highs is usually a good idea.
goodluck all
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