First it is ludicrous for CDU to argue that they want to avoiding draw down debt and that is why they are raising $50M. Business 101, debt is always cheaper than equity and therefore having the right debt level provides optimum returns to shareholders.
Second, what has AM Capital been told that allows them to take a punt at $2.38 share price?
Third, we are being sucked into believing that there will be a great market for the options on the ASX. This won’t be the case if the share price stays below $2.50 as Mums and Dads will not buy shares and if the big shareholders purchase to avoid dilution, why will they trade the options? AM Capital may end up with significant options and therefore why would they trade them (especially if in two years the Coy is making squillions)
Fourth, you have to be sceptical on how much further money they need. $150M in 2013 and still 12months plus away from fully ramped up. Hopefully this will be cleared up in the Rights Prospectus and not just the limited “positive spin” information provided today.
Fifth, how does this place Sino Steel and their “shares for equipment” at $3.45.... I assume rightly peeved . Hopefully Sino does not down tools
At the end of the day, AM Capital may end up being the true winner out of the Asian investors. If ever CDU needs to go back to the Asian well then expect a price sub $2.50 and a growing list of Companies peeved
I feel like a cheated wife, CDU keeps promising that enough is enough..... but I keep finding there is another one night stand.
CDU Price at posting:
$2.08 Sentiment: Hold Disclosure: Held
