Well I wasn't a fan of the idea and I still have concerns, but I wont be complaining if the SP moves up a good way.
It is a waste of money in the sense they paid a serious brokerage fee to raise that cash initially. Now that is kind of going to waste (if the net result is a higher SP then I respect we could debate that point). Additionally as the crazy man said, it doesn't necessarily increase company value because anyone calculating ICI value would have been looking at; cash + assets + future potential (take a guess) equals total value, divide by SOI. Now the cash component will go down relative to the SOI. Hopefully the market doesn't treat this entirely rationally and the end result is a higher SP.
SBBs scream that a company doesn't have any better plans to grow using their $$s. I think we all had in mind that $10mil was like ICIs loaded gun to get out there and do some awesome deals. Now they are going to fire one barrel just to prop up the SP.
I totally agree the current SP is an attractive buy and I do see the opportunity in that trading volumes are low, so with some SBBs they can push the price up substantially. But if in 2-3 years time ICI is coming back to the market cap in hand I will be hugely pissed with management. So in some sense there is a vote of confidence from management in making this move.
All in all, it tells me to narrow by hold window with ICI, because I wont be hanging around if cash starts to become a looming concern.
ICI Price at posting:
6.9¢ Sentiment: None Disclosure: Held
