It's amazing what a simple line in a report can tell...and I think the following in note 6 of the financial accounts is significant: "Facility limits exclude the increase obtained after reporting date as described above.'
So here's my take on the matter:
The Board is serious about supporting the price and closing the gap on NTA.
They approach their bankers for additional funding to do so...and are successful. Witness this comment in Note 6 "On 8 August 2018, the Aveo syndicated facility bonds limits were increased by $77.5m" This combined with their cash surpluses of $71m and undrawn facilities at June 30 of $42m means they have firing capacity of spprox $191m.
Why else would they extend the facility when they know their working capital requirements will be less in FY19 (418 units) versus 500+ in FY18...and they will have the benefit of a rundown as the FY18 stock is sold.
Got to be buy-back and this time they have the cash to do so, whereas the last buy-back was a farce.
When do they start...I don't know...but I would suggest that Grady's recent purchase of $184k @ $2.05 sets a signal as to what might be an excellent buying price.
Ironically though, at these ludicruous prices any buying by the company makes the NTA gap worse. I did an exercise...The company outlays $115m at an average of $2.30...the net effect is to shift the NTA per share up from $3.92 to $4.11
Could the buy back be tied in with a future share allocation?
Example: the company cancels the $115m of shares at $2.30 and subsequently re-issues them (plus more) to a cornerstone investor at say $3.30? I don't think there would be much objectiosn for exisiting shareholders to this. Then uses the extra cash to cancel debt or fund a larger development pipeline.
Grady's problem is simple...how can he placate existing shareholders who know how cheap AOG is and yet offer a discount to get institutions on board. Plus Mulpha want their pound of flesh too. Interesting dilemma.
AOG Price at posting:
$2.04 Sentiment: Hold Disclosure: Held
