EVO - Evolve Education

[Beagle]

Caught up with sister in law on the weekend. NO change to the general state of play at EVO which is still grim according to her.

[winner69]

WOW — write everything off (non cash off course) and pay a chunk of the debt off and begin down the path to global domination

It’s just like starting off all over again with a further $64m of new shareholder money

If those Aussie guys are any good EVO could be a good punt if you can get in at close to 10 cents,

Shame F20 profits are going to be less than F19

http://nzx-prod-s7fsd7f98s.s3-websit...199/299442.pdf

[whatsup]

Punt is the work, Q what is the "quality " of assets that they are "acquiring " from Aussie?

So the N Z assets are worth , WHAT now?

[whatsup]

WOW EVO will have to just under 1Billllllllllllllllllllllllllion shares on issue, implied "value " of circa .10 , fully underwritten, are poor suffering S Hers game to take up their share is the million $ question, who is game here?

[whatsup]

These guys just announced a estimate of reasonable earnings coming through. Salt funds is just managing their positions and reducing accordingly since it has basically doubled in the space of a week. If this was a stock that wasn't making much in the way of earnings then I'd see it falling and see where it could be a dead cat bounce, but this is a material announcement they just made. Many people are sitting on huge profits so they are selling down, though 18-20 cents isn't likely or else it'd end up being too much of a bargain not to buy in to. Turnaround going smoothly and three new centers about to open.

Also end of last year Chris Scott the former Managing Director of G8 Education came on board, this is where the smart money is. For anyone who doesn't know G8 Education you should go read up on this ASX company, beautiful story that became an Australian market darling.

sb888, don't know about "market darling , down from $5-60 -- to $2-87 in 5 years !!

[Beagle]

I have previously clearly articulated that
1. The goodwill figure on the balance sheet is a complete joke and the carrying value grossly overstated its real value (surprise surprise, I was dead right)
2. That the bank will be getting nervous about their exposure, (gosh substantial debt is being repaid, there's another surprise lol)
3.That operations were performing poorly and there are deep systemic issues with the business, (again no surprise that FY20 EBITDA forecast is lower, what successful turnaround plan...what a pathetic joke...how many years now have we heard about this turnaround plan, I have lost count sorry lol)
4. I was unimpressed with Norah Barlow's involvement. (She is intending to resign, that and the Chairman going are the only positives in this fiasco)

It should be clearly noted that
a) Despite much talk of their so called turnaround plan that FY20 EBITDA is materially lower than forecast FY19. (That is really pathetic)
b) This capital raise was done "in consultation" with their bankers - This is code for the bank told them to do a major capital raise or find another banker !
c) The issue price is at such a deep discount to the share price it all but entirely writes off investors original capital - WOW !

Shareholders need to ask themselves some serious questions here including
1. Why is FY20 ERBITDA still declining relative to FY19 and yet they have been talking about their much hyped turnaround plan for years ?
2. Does this indicate that the business model here is fundamentally flawed ?
3. Given that over many years various CEO's management and Directors have presided over such a massive destruction in shareholder value in N.Z. why would you trust them to create value for shareholders going forward ?
4. Given their track record here why would you back them to make a successful go of things in Australia ?
5. Why throw good money after bad ?

I expect the share price will quickly rerate down to the rights issue price and any apparent discount of the new offer will vanish.
I hope the underwriter has deep pockets and one wonders what the underwrite fee is and if there are any force majeure or similar clauses in their agreement ?

For what its worth I will not be punting on this mutt at any price.

Going on a new fishing expedition in Australia while they've made such a comprehensive mess of things in N.Z. over many years and are still carrying significant bank debt here is quite frankly gross recklessness.

[silverblizzard888]

Terrible dilution for 8 cents a share, this is going to really put a sour taste in every shareholders mouth, but I do like the use of capital strategy.
It seems like they are starting again, but except this time we have Chris Scott pulling out his Australian strategy which seems like it would be a much more of a successful strategy and should that pay off then it will prove valuable proposition going forward. i not sure why they suggest paying a dividend again if you've just had to dilute the life out of the current shareholders, seems like a massive kick in the balls followed by a kiss, some might just prefer a softer kick instead.

[carrom74]

Chris Scott paid 64c for a 19% stake per share and this was just last year... Now he has "promised to absorb all his entitlements" makes me wonder whether he is desperate to take over the company or basically he has no choice... but as Silverblizzard rightly put it... 8 cents is terrible dilution and ridiculous... its HIGH risk territory now.

[silverblizzard888]

sb888, don't know about "market darling , down from $5-60 -- to $2-87 in 5 years !!

How G8 Education runs now is a different story to how it use to run. There growth has slowed and their debt size has grown quite large, so the market doesn't give them the high valuation they once had, it doesn't negate what good work was done in the past when you had shares selling at 10 cents and moved to the higher value it has now. Not quite a market darling now, but the rise and fall of market darlings aren't exactly new. Remember Trilogy running up to $5 a share before selling for $2.26 in a takeover? Market darling at the time too, though matching market expectations isn't always a easy task.

[Beagle]

Centre occupancy rates remain under intense pressure according to my sources which will be why FY20 forecast is lower.