Have been doing some digging on the new direction finance proposal. Been organised by Alan Beasley with contacts in the equity market from his former life. Consistent with what they have said and no access to most of the required data the whole thing is subject to due diligence which is why the potential providers don’t want to be named ….but I’ve been told it’s very similar to the financing he did during his short stint as Chair of ADY (convertible debt with 12% coupon and converted to equity at a 20% discount! Ouch).
There will lots of dilution to existing shareholders coming with the proposal, essentially it is equity at a discount. This is consistent with Bob Dean’s vitriolic and rambling letter where he implored people not to sell because the share price would fall (nothing if not insightful) and that lower share price would mean more dilution (ya think). Guess he is maybe starting to learn a few things about how the share market works and why it is best not to telegraph equity raisings. Shame is he seems determined to do this learning on CTP!
If newdirection achieve what they seem to be proposing at normal market levels ($100m placement at 20% discount to 30 day VWAP) the number of shares on issue will increase 240%. To put this in context if Macquarie were to come back offering the same amount of money for all of CTP plus the new equity they would only be offering 12.7c/share!……guess newdirection don’t care being a bunch of self-confessed fee seeking former shareholders. Wouldn’t trust em.
CTP Price at posting:
13.0¢ Sentiment: Hold Disclosure: Not Held
