Yes hotdog you are right - we did need some working capital. That being said, a lot of the presentations have eluded to not needing to raise any more capital given we would be cash flow positive in the very near future.
Here are some more points after some more reflection:
1. raising at 20cps is a huge discount. If you look at the chart of this stock we have not been at 20cps for a year.
2. $10.9 million AUD is a huge raise for a company valued only at $80 million. That is a total of 54.5 million shares being issued. With a total register of 296 million shares, thats 18% dilution, which brings me to my next point.
3. This is an 18% dilution - at the last AGM just been we only approved a placement size of 10% without our approval. Given it is an entitlement offer rather than a placement, is that how they are getting around shareholder prior approval? If so, that leaves a reasonably distrustful taste in my mouth.
4. Lastly, the institutional shares are listed on market on the 1st of December. The retail ones are released on 20th of December. Good to know that the institutional investors will have plenty of time to drive the arbitrage opportunity to zero before our shares are allocated. This guarantees the share price will be 20cps by the time our shares are listed on the 20th. This undoes a whole year of share price appreciation and makes this one of my worst performing investments this year. Although my buy in is much lower, this still is a lot of work and time being undone.
Highett, this irks me as well. The lack of communication from this company is appalling. Which I think is why what 6186mark said is true:
The liquidity of this company is shot to pieces by the fact that the company cannot articulate its success to market at all.
Sure, they have been slowly turning the business around and were looking like profitability was just around the corner. If they were so certain of increased profitability soon then why not just raise $3 to $4 million to give you a years run way, rather than $10.9 million to give yourself 2.5 years.
My faith in this management team has been majorly swayed - agreed with 6186mark again, I hope that Chris Morris does look to make some changes after this.
(20min delay)