Here's the logic as to why a significant capital raising (possibly $30m-$40m) is inevitable:
- ANG raised $35m in Dec '13 when net debt/equity was 35%. At the time, it was forecasting $40m-$50m EBITDA for fy14. In simple terms, despite what they felt would be a bumper earnings result (it wasn't, it was a shocker), they still felt that it was prudent to raise capital.
- Currently, the balance sheet is worse off. Net debt/equity is 54% (remember it was 35% when they raised capital). Furthermore, the earnings outlook is highly uncertain and won't be anything close to $40m-$50m EBITDA for fy15. Probably, $25m tops.
So, using this logic, ANG should be raising capital. It's bleeding obvious. The market will soon wake up to this and start pricing in 20%-30% share dilution. You have been warned.
ANG Price at posting:
$1.21 Sentiment: Sell Disclosure: Not Held
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