Unfortunately that seems to be the effective message from Appen, wait ten years and maybe you might get your money back. I am sickened by two deeply discounted rights issues in six months. First one had a rocket behind it after AGM when the C suite dream team were introduced to investors. Six months later the CFO, CMO, CPO and CTO have all left. WHY? After the last raising we were asked to approve an inventive share scheme to encourage new hires. Ipso facto that did not work. They all left. Now we are being asked to give away more shares to incentivise new hires, or maybe it is to retain people who have been managing the company through its 99% value destruction. WHY? Look at the retail offer document, Barrenjoey are allowed to trade APX to support the price. WHY? The treatment of retail shareholders has been awful. They are the ones holding the vast majority of shares yet they cannot subscribe to more than their allocation. We are being massively diluted, the number of shares on issue has doubled in six months. Perhaps I am being paranoid but I suspect that the next offer retail shareholders will get is for a deeply discounted American management buy out after which the company will rise from the ashes. I sincerely hope that the independent board directors are watching out for this. The institutions only backed this by 60%. I expect retail support to be under 20%. Who will win? The shorters. WHY? The hedge funds who massively shorted the share were allowed to cash out at 55c. They can sell on Monday before the retail offer is complete. WHY? If you think a hedge fund will hold a 55c share when they can book a profit in a few days, get real. Once they have sold they know that there will be a massive underwriting stock overhang due to the likely poor retail take up so they will be shorting again. If the price is below 55c who will buy into this offer? It is obvious that Appen do not have a CFO, no qualified accountant of standing would approve this capital raising. The Chairman who appointed this CEO has a lot to answer for. Appen have two business days to announce something positive, otherwise the capital raising will bomb. Wholesale incompetence. Huge value destruction. Perhaps allowing an Australian company to be managed by Americans in Seattle is a flawed decision? Delighted to be proved wrong. Not at all convinced.
APX Price at posting:
64.5¢ Sentiment: None Disclosure: Held
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