Rod probably needs that $30m elsewhere
He’ll have to live with the dilution eh ...19% becomes a lot less.
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Rod's too much of a prudent business man to risk what he has for more.
Briscoes has $67 million cash on the balance sheet, with 18.9% shareholding even for this raise Briscoes would have to put in $33 million to maintain their currently holding, never mind a takeover.
SP will track closer to the issue price. That is the most common way issues go from my experience.
He would have been approached under the $30m placement at 50 cents for sure so would have had ample time to carefully consider this capital raise already. Arguably the smartest man in retail in N.Z. That he has declined to participate at just 50 cents gives all shareholders of KMD and other retail companies a valuable insight into the seriousness of challenges he foresees ahead. Hope the underwriters have deep pockets.
Rather telling indeed - unless he wants the sp to really tank during and post the capital raise and then, make his move then?
Not taking up his 'entitlement' means the underwriters are already in the gun for around $35m of the $177m rights issue. :eek2:
Looks like sp could drop to 51c - 53c with that kind of overhang!
Net debt after capital raise will drop to around $80m vs SHF of $780m - so should be okay.
Only problem is that bulk of balance sheet consists of $635m intangibles! :eek2:
No question in my mind that this is a bank forced capital raise.
Thank goodness KMD has got underwriting in place.
We do not want another Pumpkin Patch - NZ needs our home grown brands.
At least shareholders who want to make a real killing Can also apply for some of Rod’s shares
Captain Kirk’s biggest challenge since the 87 Rugby World Cup
Hasn’t always tasted success though ...a bakery he was involved in went bust
He made a few bob out of Bailador Tech though.
Good guy though
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At least they being up front with those who are going to put heaps in
» In addition, the Group’s trading performance once stores reopen may be worse than anticipated, whether due to demand being slower to return than anticipated, margins being reduced due to the activity of competitors or the need for greater discounting than usual to attract customers, cost reductions having a negative impact on the Group’s ability to recommence operations quickly and effectively or other unforeseen factors. If these factors arise, they may have a material adverse effect on the Group’s financial position and performance
Been thinking about these guys more recently....
My general feeling has gone from somewhat negative to full on bear for a few reasons... Most of this is centered around Kathmandu rather than RipCurl and Obaz as I know more about it and from an earnings perspective is the cash generator of the bunch.
As posted above, Kathmandu is really the business they are by identifying a thin niche within the consumer goods market. They arent the best 'rag trader', holding ~17 weeks of inventory (IMHO HLG is good performer on global standards) but they knew who their customer was and effectively sold into that market. What is really probamatic is that their product portfolio from a purchasing perspective is quite 'activity related' i.e. if you need to buy everyday items you dont necessarily think of Kathmandu (and their marketing isnt aligned this way), but if you are travelling, or spending time in the outdoors then thats their niche. From a $ perspective product is 'upper mid' and so in a reduced economy that same niche of consumers will look to trade down within the category. The macro social/consumer effects over the next 2 years are going to seriously work against them, I know of other large brands which are re-configuring focus of their porfolio to be on the right side of these changes. Likewise their online sales arent amazing (though growing well rec
Also, I dont think (and somewhat know from discussions I've had with senior staff through my work) that they dont have near the brand equity around ethical/sustainability to keep those concisous consumers in a downturn (they list ~600M of intangibles on their balance sheet(. Moreover, from some social media posts I've seen (and joining all of the dots) they are withholding payment to local NZ suppliers of theirs....
IMHO, unless they do some serious turning of the ship they are going to be in some serious trouble. Their high levels of inventory holding (due to seasonal business) will come back to bite them. Has anyone stress tested their numbers? Asuming the raise goes ahead and the cost out initiatives they have outlined, are they able to swallow a -25% best case/ -50% worse case decline in revenue?
Sorry long post of rant