Astro, A CR is only a big deal to the extent it creates significant dilution, that is a function of two things if you assume it is not done as a rights issue. The first is are they buying an income stream or asset that can offset the dilution, the second is what price and how much is raised.
So for Volpara, I think it is unlikely that they will undertake a CR for acquisition at this point. So the second point becomes how much will be raised and at what price. When I look at my cashflow forecasts I reckon they need @ AUS$ 15 to 20 million to achieve sustainable cashflow neutrality, that is before any additional investment in new products or step out like lung.
So once the market understands that a CR is inevitable buying dries up, shorts build and the stock will fall. That is the position Volpara finds it self in now. If they come to market as an existing shareholder would you prefer they come at 90c or 40c ? Obviously 90c, right ? As as an existing shareholder the dilution is less.
So I do not think a CR in its self is a problem, I think a poorly handled CR is and that is a real possibility here. In my opinion and with hindsight they should have raised much more at the last CR.
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