For those that are interested in approaching the question of an...

For those that are interested in approaching the question of an equity raising from a different perspective, here is my view.

If, as discussed above, the working capital position deteriorates by $8.5m over the next six months, this would need to be funded by an increase in borrowings from $6.4m to $14.9m at the end of June 2018 (all other balance sheet items remaining equal). The equivalent number for the end of June 2017 was $25.7m.

So although the borrowing limit has been reduced, the outstanding borrowings heading into the 2018/19 season will be approximately $11m lower. That leaves a deficit of $7m ($18m loan limit reduction - $11m lower borrowings) that would need to be funded via the various initiatives discussed above.

Two further points, however, that haven't been discussed above. Firstly, the EBITDA guidance provided by management indicated a break-even performance for the second half of 2018 (presumably due to closing unprofitable stores following the Xmas trading period) so we should not assume that the working capital position will deteriorate by $8.5m. Secondly, the September quarter in 2017 was a low point for company earnings (most likely a substantial loss) and would have further strained working capital - such a situation is unlikely to recur this year.

Based on the above, the chances of an equity raising are very low.