Thank goodness it’s underwritten. They will struggle with retail...

Thank goodness it’s underwritten. They will struggle with retail holders who are mostly underwater and are completely disillusioned with the performance of management. The offer is already on the rim of the SP. Where’s the incentive?

@PortfolioPlus,

If I was a shareholder, my take on this capital raising would be totally different to yours.

Not only is it being underwritten, at zero discount, but by directors of the company, at that.

Put another way, if the founder and directors bought $12m of stock on-market (assuming there was the liquidity to do so), shareholders would take that to be a positive thing because it means more of their dough on the line next to yours.

That's exactly what is happening here, but with the added benefit of recapitalising the business.

Sure, the business is not a good one (the operating environment is the lousiest it has been in many years, which is simply what you sometimes get with economically sensitive distribution businesses, while many of NTD's problems have been self-inflicted).

But given a capital injection was probably going to occur (although I suspect they could have muddled through), as capital raisings go, this one is very favourable for minority shareholders, I would have thought.

Of course, to avoid being diluted, minority shareholders will need to pony up 1-to-4, but it could have been a lot worse: they could have mandated a broker to do a $10m placement into some hot hands at a 20% discount, which would have seen the stock price almost certainly starting with the number 2 thereafter.

As I said, if I was a shareholder, I'd be somewhat relieved.

.