I am a bit unsure also about taking up my entitlement. I hold at an average of 12c so of course I am not happy with the current SP.
The real question for us is whether a purchase at 5.5c makes good investment sense. I certainly believe there is some upside at this price but with a risk. The pluses include the stabilisation of debt (including particularly moving towards non-recourse debt which is less threatening to survival), the possibility of leasing some single box, and the chance that the US economy will recover and cap rates will improve.
The downside is the potential losses on the non-recourse debts if not rolled over, and the possibility the SP will stagnate through non-payment of dividends. The non-payment of dividends may be outside MDT/EDT's control if cash flow is directed towards debt as part of the refinancing.
At the moment the SP is being held down to the entitlement price, presumably because most interested holders can get more at that price. We may start to get a picture of the market's real assessment once the rights cease trading - but it may well be too late for our own decisions before we get a real market indication as to the new SP. Entitlements trading ends on 2 June - would be great to see the SP lift before the close of the offer on 9 June but this is obviously wishful thinking!
MDT Price at posting:
5.5¢ Sentiment: Hold Disclosure: Held
