With a lengthening list for company, CMR looks like joining the subeconomic metal makers group. The difference for CMR is one of scale. The other losers are babies, CMR is a monster. One way or another this company is a problem for all levels of Government. It could have been the BHP for the current century.
Could it still be?
What to do?
With perhaps $9M in the kitty but a burden of liabilities, CMR is either broke or severely damaged. It needs capital, not short term hope injections from governments looking for reelection yesterday but from investors with a very long term horizon.
Investors like the Future Fund.
The future fund is about generating income to cover Commonwealth superannuation unfunded liabilities. It is not about handing money to poorly managed businesses to be squandered and wasted.
I wonder if the current management of CMR is able to put together an attractive restructure proposal.
Assume they can.
I looked but couldn't find data on how much the Future Fund may have already tipped the the very dark CMR hole. Probably a formerly tidy little pile, I suspect. Now they need to be attracted to tip in a hole* lot more. Say we ask them for $40M.
Now for the price. As much as they could realistically be encouraged to pay. Say 20c/share. We really want serious consideration so say we add in a 1 for 1 free 20c/2year option as an incentive. All this adds 200M shares to those already on issue, plus another 200M if the oppies get exercised.
Shareholders are already unhappy so lets keep their anger contained with a rights issue. Perhaps we make it renounceable so punters with seriously empty pockets could at least try and recoup a bit of dosh. Say we offer another 300M shares pro rata, again with the free oppies.
All this adds up to $100M now and possibly another $100M in two years if all goes well. Enough to keep a world class resource ticking along provided it is tightly managed. Could the current management be trusted to cope with this scenario?
I wonder.
* You gotta laugh. This is what my daughter's boyfriend would call a "dad joke". Not much else to laugh about with CMR.
CMR Price at posting:
15.0¢ Sentiment: None Disclosure: Held
