Anyone here want to speculate that if Downer needs to raise money through a rights issue/placement/share purchase plan what would be the price and what the amount would be?
Usually these will be done at a 15-20% market price discount from my experience. I have to admit that the last placement I took up was Reed Resources (RDR) so maybe I am comparing a spec stock to Downer would be unfair.
The provision for the Railcorp deal seems to be $350million by the time the saga ends (I am expecting more write-downs in the next 6-12 months since management has proven to be incompetent). There may be other smaller write-downs on the cards? I think Downer would need to raise in the range of $400-$450million.
Downer debt is also very very high compared to the industry and its equity. Then again the share price was $8+ not too long ago so the equity side has more than halved in value.
Anyone think that this could lead to a takeover by a predator taking advantage of DOW weakness?
I am thinking to buy some DOW for the long term but only after they clarify the capital raising issue that seems to be in the media of late.
DOW Price at posting:
$3.79 Sentiment: None Disclosure: Not Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)