Gunns has about 400 million shares on issue.
At the last price before they stopped trading that meant their company was worth about $670 million (400 m x $1.67).
ANZ wanted them to cough up $440 million plus they intended to sell $170 million in plantations.
So they offered the opportunity to invest in 7 new shares for 10 already owned at $1.50 and managed to raise $330 million from institutional investors who aren’t risking their own money.
They expect a further $100 million or so from retail investors on the stock market.
But that may not happen…when the market opened, their share price collapsed to $1.31 before bouncing up to $1.38.
This is a big disappointment for them and their institutional investor friends. Here’s how I have it…
With their shares worth less on the stock market that their offer price for the new capital raising, they are unlikely to achieve the retail investor issue of $100 million, putting them $100 million short of their goal. They’re probably phoning their institutional investor mates as you read…plus calling in political favours like you wouldn’t believe.
In addition, their shares are now only worth $1.38 (400 million x $1.38) giving a net worth of $550 million plus their new issue of $330 million gives $880 million.
So they still owe more than they should and
* their directors have failed to deliver increased or reasonable profits
* their directors have failed to get a pulp mill going despite their promises
* their directors have now failed to get protect shareholder value
* their directors have succeeded in causing their institutional investment friends further losses
...and Gunns is still not out of the woods!
These are SERIOUS errors by the directors.
If you can get seats at the next AGM on Oct 30, GO!!! Anybody with spare proxies, I’ll take them off your hands!
The meeting will be a complete zoo if this goes on…all bluster, shouting and threats with Gay being pressed to resign along with many (all?) of the others while he blusters about Greens and pulp mills.
Well, the market has voted against Gunns. Here’s the math (as best I can figure it) …