I agree Westsice...a massive raising and somewhat unexpected (by me at least) as to the way they have done it and the massive discount they offered...but I guess the clues were there when you look at the Mirvac and Stockland cap raisings.
The dilution is HUGE and I've just got to take up the entitlement so as to ensure my buy price remains around 50% of NTA.
I started this thread by saying that SGP is circling the FKP retirement interests. In the light of this cap raising ann, I now don't think so. I picked up two clues in the presentation.
(1) On page 9 talking about the Bank covenants, one of the covenants states that "Total net tangible assets to be not less than $1.0bn" I'm not sure they would comply with this if they got rid of 100% of the retirement assets.
(2) On page 21, talking about the equity raising offer they state that Mulpha the largest shareholder intends taking up its full quota...no mention of Stockland whatsoever.
Then there is the capital raising requirement. Obviously FKP have abandoned hope of Stockland stepping up to the plate...or maybe SGP were trying to buy the assets on the cheap.
FWIW...I think the SGP retirement target now is Aeveum (AVE) and I purchased a small stake today.
But back to FKP...not happy about the need to double my investment as a consequence of the cap raising but also acknowledge there are some distinct benefits:
(1) The loan bogey had been put to bed once and for all with gearing now at an acceptable 34% and in the same ballpark as Stockland and Mirvac.
(2) The company now has the time and funding to complete a number of its developments.
What was a complete surprise though was the size of their 2H09 asset writedowns...all up at $268m. But, they appear to have come clean on a number of their assets...particularly the RGV interest (with Mac Bank) and Norwest JV (with Mulpha) where they have taken a $69m hit.
The other surprise to the downside was the poor guidance as to dividends for FY10 at just 1 cent. But I figure that they know thay have got this cap raising away and they may as well err on the conservative side so that when they upgrade they will look like heroes.
Conclusion: With the quality of the assets that FKP has (and that's why I am a supporter), this is a growth stock that will over the next couple of years grind its way back towards the NTA of $1.20.
But the next few months of trading will test the nerves of the faithfull.
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