RE:RE:A POORLY CONSTRUCTED RIGHTS ISSUEBang on!
Here we have a company with two good assets and 30% of a potentially superb asset. Plus a bunch of developing assets that may or may not be junk.
Furthermore, the NAV is $5.30 per share. I am not sure how meaningful this is, but I am an asset guy and a high NAV relative to SP does give me some comfort.
Normally under such circumstances, I would say a rights deal is the route to go as it gives every shareholder the opportunity to retain their relative position. BUT AFTER A SIMILAR DEAL WHERE THOSE WHO PARTICIPANTED GOT CREMATED?
I don't think so.
If I were Edco or Fairholme, I would wonder what is going on here and would wonder who is making the capital raising decisions. Sure it would cost some money, but maybe it is time to hire a street wise broker who could help them navigate through this mess and broaden the interest in the company.
I am sure that there is value here but this rights issue will certainly go a long way to destroying confidence in management.