I have recently started to research this company. The elephant in the room is how they choose to fund this ambitious project Montrose.
With 37m of residual capex on the current estimates to complete it would appear to me that a capital raising is quite likely? Borrowings will be around 17m currently with the land asset (69 Power Rd Bayswater) sold. The existing bank facility expires in October this year and with the Montrose project scheduled to start in August it seems reasonable for the board to make some funding decisions over the next few months.
I don't see how the project can be completely debt funded. After modeling a few years of financials the business requires a reasonable amount of maintenance capex through equipment and intangibles. Once the project is completed i assume the current production facility (5 Brunsdon St Bayswater) would be sold to reduce debt.
The project seems quite ambitious in its scale but possibly takes the business into a higher gear with greater manufacturing efficiency and scale.
SDI Price at posting:
82.5¢ Sentiment: None Disclosure: Not Held
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