With today's CR announcement I have to say I've been a little shocked, at first I was shocked in a bad way (obviously with existing shares being diluted etc... etc...) and then my mind kept on repeating the same old saying of "why didn't Nearmap come to the existing shareholders for this placement under another SPP ? "
Anyway, after reading all the comments here, I soon realise today's news is actually a GOOD SHOCK.
Now if I set aside my human emotions for a moment, the facts leading to today's announcement was that, back in Nov 2016, when the first CR was executed to raise $25m ($20m via institutional & $5m via SPP @$0.70), Nearmap had clearly learned a lesson, because although the $20m was fully raised, the SPP to existing shareholders only raised $725k (ie. the SPP was only 14.5% filled).
Now don't get me wrong, like many NEA shareholders I too would LOVE to get an SPP offer of $1.6 a share this time around. However, if you were Nearmap's Management and with the previous CR lesson in mind, why would they waste any more administrative processes in doing another SPP considering the previous outcome?
Anyway, these were the hard fact.
Now, I believe the failure of the previous SPP was largely due to the fact that on 21st Nov 2016 Nearmap announced to the market that:
"Nearmap does not require new capital in order to progress its existing business plan and the Company advises that, at this time, no decision with respect to whether to seek further funding (or as to what form it may take) has been made."
And then less than 48 hours later, on 23rd Nov 2016 surprised the whole market with a full CR presentation pack. This presumably misleading behaviour has obviously disgusted many investors and as a result this 'broken trust' the sp traded well below $0.70 for around 6 months post the CR placement.
To be honest with everyone, this too left a bitter taste in my appetite for more NEA shares since a trustworthy management is what I look for in a company.
But after the dust has settled, I think we need to ask ourselves:
"Ok, so Nearmap should have handled the last CR more professionally (i.e. putting the stock in trading halt a lot earlier & not leaking any news beforehand etc...etc...). But as a rapidly growing company, in hind-sight have they wasted the CR money raised back in Nov 2016? If you consider all the growth metrics before & after the CR, I'm actually impress with the growth and successes in their US business achieved thus far & only with $20m."
In fact, with the last CR, I'm actually glad the sp dipped below $0.7 for 6 months because it gave a LOT of retail investors like YOU & I, a chance to enter (or re-enter) the stock even BELOW what was being offered to the institutions !
I'm also very glad that the last SPP had only raised $725k instead of $5m, because back in Jan 2017, Nearmap only had to issue 1,035,652 new shares instead of 7,142,857 new shares if the SPP was fully filled. So I see being undersubscribed in the last SPP as very good news because the saving of 6,107,205 shares not being issues before is now worth almost $9.8m to Nearmap this time around !
So whatever happens after this trading halt, this latest dilution is really insignificant considering Nearmap is now potentially setup to conquer Europe, Canada, Mexico, and maybe even Asia in a much accelerated timeframe. This is the PRIZE that you should not overlook !
Besides, if the sp raises or stays the same after this trading halt then you have nothing to worry about. And if the sp dips below $1.60 then those upset about not getting a SPP this time around should be JUMPING with JOY because you can now buy more shares at a GREATER discount then the institutions !
So WIN - WIN for ALL !!!
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