To take a simplistic view I always look at a companies Cash Flow statement at the operational level.
This gives you a basic view of how the company is faring at the hard core base level of running their day-to-day business.
It includes (only) the cash flow from running the business:
Receipts from customers
Payments to suppliers & employees
Financing Costs
Interest received
Interest Paid
+/- income taxes.
At this level the company experienced a cash outflow of $7.5mio.
Now obviously, if a company is going to reduce their debt it has to come from the cash flow of their day-to-day business or selling off assets.
CDR's banker's will be looking for a reduction in their exposure, so where is the money for this going to come from?
Cleary CDR are going to either (a) lift income and/or (b) reduce costs - was this issue addressed at the AGM (wasn't there so I don't know)?
In a nutshell, CDR are bleeding cash at operational level and are going to need a massive reversal of fortunes to change this.
As for a rights issue, well it is fair to say that equity is a lot more expensive to service than debt, and is generally only undertaken as a last resort. A rights issue will immediately devalue the current share holding of existing holders.
The fact CDR have had a series of "vultures" going over their books, and they all said "no thank-you" must tell you something?
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