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G'day Mark

Capral have been losing money for some time, and as a result the share price had decreased from almost $2 to 4c within about 7 years. One of the main reasons I have been told, is because the company wasn't being run efficienty enough, and their customer service was pretty poor. In saying that though, Capral appear to have a quality product, however it is expensive compared to the imported stuff.

Earlier this year, they were sliding downhill to 4c, and things were looking quite grim, as they had a heap of debt and they were losing money through poor management, lack of efficiency and high costs. At this time, the Board appointed a new Managing Director with a good track record of turning things around. It was an expensive coup, but they only chance the company had of turning the company around. On his appointment, shares jumped up from 4c to 8c, as people started to get a bit of confidence about Capral, and people could start to see some slight signs of hope.

With that said however, the new MD was still faced with a massive challenge, as the company was riddled with debt, so much so, that even if he was able to cut costs and make the company more efficient, it would not have been enough to turn the company around, as they were simply too far behind the starting gate.

One of the main problems facing capral, besides the debt, was the fact that Chinese produces were able to ship their good out here and charge it at a cheaper rate. Capral decided to lobby the Government, in order to introduce a tax on these imports to try and level out the playing field.

Even a victory here though, may not have been enough, as they were still riddled with debt and cash flow problems.

This is why they needed to introduce a new investor, in order to try and clean up some of the debt, however it was a double edged sword for shareholders. On one hand it was positive, because all of a sudden, the future of the company started to look quite promising. However on the counter, the additional funds (which I believe was about $40m) meant that the share price would be the equivilent of 2.5c. They were trading at about 16c at the time.

That is just a basic overview of the company through my eyes.