CREDIT where credit is due, the directors of TasFoods and their associates are investing plenty of their own money into the game of building an integrated Tasmanian food business.
Together they will put in $4.25 million as part of the proposed $30m capital raising later this month. The money is partly to fund the proposed takeover of Nichols Poultry, announced last February, and partly to build up cash for future expansion.
The offer is 83 per cent underwritten by Bell Potter, so the company is assured of getting virtually all of the money it wants.The way the company has gone about the whole process, however, does not inspire great confidence.
Initially they hoped to raise the money by selling shares at 30 cents each. That had to be reduced to 27.5c because of the weakness of the share price on the market. That has now been reduced again, to a final price of 25c.
But even at that there is no immediate incentive for ordinary shareholders to take up the offer – last time The Punter looked, the shares were selling on the Australian Securities Exchange for 25c. Bell Potter could end up with about 100m TFL shares they’d like to sell, which could put a lid on the share price for quite a while.
The Punter has decided, therefore, not to wait for the official prospectus but to cut his losses and sell his TFL holding. He is also dumping his Odin Energy (ODN) for a third of what he paid for them. Win some, lose some. Sigh.
The current Gold Road Resources share offer (GOR) contrasts sharply with the TasFoods effort. It will close on May 25, only four weeks after it was announced, is fully underwritten, and shareholders will not be allowed to buy more than their one-for-10 entitlement.
The company has already raised $56.6m in a heavily oversubscribed offer and placement to institutional investors.
The Punter will probably take up his entitlement of 1,000 shares at 44c each.
• The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
