Does anybody else have a view on this ann late yesterday ? As announcements go it's a pretty big one. Looks like at least 6 major announcements shoved into one release:
1) Brett Pointon looking to sell more than a third of his holding to China Pacific, ie 20% of the company.
2) Likely writeoff of $8-11mil from value of Dubai asset
3) Bank debt extensions and covenant issues need immediate attention
4) Cancellation of final dividend
5) Rights issue to try and raise $30mil to pay down debt, ie approx 57% of current issued capital based on today's market price
6) Rights issue possibly underwritten by China Pacific to the tune of $9mil (ie $15mil - their 20% or the $30mil to be raised). So less than 50% of CR will probably be underwritten
No dates or prices have been released and market reaction thus far not good. In my view if they can make the capital raising a success then it's a possitive for the company and the stock looks cheaper than ever.
I understand that many holders own OAK for the massive dividend so the cancellation of the final dividend is a real bummer. The writeoff in Dubai is a big disappointment also and it would be nice to have more details about this so that we know exactly why we are taking a bath on it.
Taking a longer term view though, earning sounds like that are still strong relative to price, SP is cheap and with little or no debt the company should be able to maintain it's traditionally strong dividend policy in the next FY.
While it might not instill confidence the major shareholder selling down, capital raisings can be more difficult when 55% of the company is held by one shareholder. Maybe bringing in an additional investor with deep pockets is actually a good thing for OAK and possibly necessary to actually make the rights issue a success. I know nothing of Brett's financial situation but more than $15mil of the RI would have had to come from him had he not looked to sell down.
All in all maybe not nearly as bad as it first appears.
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