We need capital. The company was living from debt package to debt package. COK made public ASX announcements that they were looking at all avenues- asset sales, corporate transactions etc. Im sure they talked to a wide number of players and looked at all the options. Its not as if management have failed to pull off a deal in the past.
What assets would we need to sell to raise $300m? It would have required giving up a prized asset, cutting off an arm and a leg to save the body so to speak.
The only way we are going to get out of a 26c resource valuation is to get to production- who wants 90c when a $100 is available for a producer. Only way to generate this value is to invest capital- and this deal in my view is a great one, a share issue at a 40% premium, capital funding to Stage 2a/2b Wiggins Island and multi-million tonne production.
I dont for one minute think this isnt a smart move and good deal for SK and would love a counter offer that somehow management missed or didnt investigate but in the current lifecycle of the company I think its a great deal. We keep our growing resource base as our future growth pipeline and all shareholders who hold for the medium term can benefit greatly imo.
COK Price at posting:
38.5¢ Sentiment: Buy Disclosure: Held
