GREY:SYXXF - Post by User
Comment by
nostrilon Jun 12, 2015 3:09am
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Post# 23823212
RE:Gentlemen - We have NEWS tonight -
RE:Gentlemen - We have NEWS tonight -
For me, the impending equity raise was always the dark cloud hanging over syd. At least now, if they can get it to work, the focus can shift to the company's prospects.
Negatives from the statement:
- This is a big intended rights offering relative to the market cap of the stock. If you don't have the spare cash to take up your rights, you'll get heavily dilluted.
- The extension of the loan, lowering of the interest rate and prior announced payment of management in stock rather than cash, all could indicate that the company if further from being cash flow positive than the former CEO suggested.
- While the market knew this capital raise was coming, it is happening in advance of any major new orders (the recent one was small). The hopes many of us had of a re-rating of the stock based on new orders before any capital raise have been dashed.
Postives:
- The lack of cash may have been a constraint on the ability to source new orders. Even if you only ask for payment ex post, a pipeline company still wants some assurance that you are going to have enough working captial to complete the job.If it was a contraint, the rights issue could be a turning point.
- The lowering of the interest rate on the loan and its extension (aside from what it may imply about near term new orders) improves cash flow. It also shows significant personal commitment from PvE. Not only is he now taking no salary, but has voluntarily reduced the interest that he was legally entitled to recieve.
- The capital raise is in the form of a rights issue. For me the biggest worry was that it would be a significantly dillutive private placement. At least now (if you have the cash) you can avoid dillution.
N.