Hopefully it’s a positive liquidity catalyst — but obv for it to stick, they'll need to back it up with visible execution.

Remarkable they managed to omit the price the raise was done at from the announcement about the raise.

Anyway, as I suspected the raise was done because they will have some ongoing WC requirements from the new home brands and the exclusives.

Likewise disappointed that ordinary shareholders couldn't participate. I get it's faster and cheaper without a SPP, but it's the right thing to do.

Also, the discount feels a bit steep, but as has been said it's probably what was needed in the current environment.

Actually a bit relieved it wasn't an acquisition. They can be a wonderful way to accelerate growth, but integration is often risky.

Time will tell how effectively they use these funds, but the stated purposes seems reasonable given the opportunity they perceive.

I agree with everyone that the discount does seem steep, but given this would have been a couple of months in the making I can also understand that the starting point was likely when the SP was around 65c. That being said, the sell off today hasn't been too bad, which leads to my next point. Yes, there are 10% more shares "on sale" now, but they did point out that shares were sold to high quality institutional investors and selected "sophisticated" (we all know @Strawman 's opinion on this term). Surely these new investors bought with a longer term time frame in mind and therefore there may not be much more liquidity in the market for SGI shares. Let's see how it plays out, whether they drift lower, or on a strong quarterly report (hopefully!) continue to climb. Time for management to execute.

Nessy

held.

The fact there is no SPP may help the price stay above 60c, as existing shareholders would normally hold off buying at above 60c until the SPP finishes and so the price drifts down to that point.

Also, if the "Sophisticated/Institutional" investors are all new, then there is no arbitrage opportunity to sell above 60c the same number of share you just committed to buying at 60c.

As for long term time frame @nessy LOL...

@Tom73 yeah, well, long term could be > 3 months! I would like to think management did sell them a 3-5 year story.

This is the same story pedalled from company to company that exclude retail holders. It’s quicker blah blah blah. Meanwhile, the sophisticated investors and institutions they have made 42% in a week. Unbelievable!

Totally hear you—it’s a familiar playbook now: “quicker, more efficient, price discovery” etc. But at the end of the day, retail gets iced out, and the sophisticated end up with instant paper gains. It’s a good reminder that “fairness” in cap raises is often more spin than substance.

That said, the sp bounce also shows there’s clearly some underlying confidence in SGI’s story. The frustrating part is retail often does believe in the company, but doesn’t get the same shot at discounted entry.

Would love to see more companies at least offer a follow-on SPP that gives retail something—doesn’t fix everything, but it helps. Otherwise, it just reinforces the idea that retail are there to hold the bag, not share in the upside.

@topowl I don’t really have a problem with companies ignoring retail in SPP. I look at it more like what is the most effective way for the business to raise the funds. I want management to raise as much money as they can for as high a price as they can while paying the lowest fees to do it and do it as quick as they can so they can get their focus back on running the business. Half the time, after a raise the share price falls back to around the raise price and you can pick up shares at the same/cheaper price, although surprisingly not in this case. To me the strength doesn’t make a lot of sense to me given the broader market context.

The advantage retail has is that you can be nimble and buy/sell without dramatically affecting the share price. Anytime prior to march you could buy SGI for under 60c a share, so maybe the better question to ask yourself is what stopped you?

It is interesting that they have predominatntly used debt for all of their other business expansion plans to date, but have now tapped the market, what does that tell you about where management see the current share price?

In my RL portfolio I recently sold out of my SGI in the low 80’s, prior to the raise, as I think a lot of the downside risk has been discounted too much and I’m not as convinced that this business is as recession proof as Mike has previously suggested. I still rate Mike very highly and am impressed with the way he has transformed SGI, but for me the risk reward is better elsewhere.

I'm late to the party on Stealth's capital raise. I've been away for much of the last couple of weeks, so missed all the excitement.

Given my history with Stealth, thought I'd throw in my 2c, although it aligns with what has already been said by others.

I was disappointed by the discount and the lack of SPP, and that they didn't have the courage to mention the share price at which the capital was raised in the ASX announcement.

Like @nessy my guess is the discount is the consequence of the conversation starting a month or two ago when shares were hovering around 70c (and which they are back to now). Also, given the risk of a small company and the challenge of offloading 12.5m shares, the investors would have insisted on a bigger than usual discount. From 70c, the discount is 14%, which is not unreasonable.

I know a SPP adds some cost (does anyone know how much??). But Stealth is already paying 5% ($375k) to MST Financial for the raise. I believe the lack of a SPP shows disrespect for existing small shareholders. Still, us shareholders are pretty stoked with share price growth this year, so it's a bit precious of us if we complain too much. It really comes down to how well the capital is used.

I'm not too concerned about the new investors offloading quickly. They must have at least a moderate-term view given it's impossible to offload 12.5m shares without cratering the price. It is a sign of confidence from bigger players that they see medium term growth from 60c.

I'm keen to know who the investors are. I don't know much about the broker MST Financial other than they are the single analyst on Simple Wall St that has supplied a forecast for Stealth (a surprisingly negative one, with FCF essentially stagnant over the next 10 years; I'm sure their presentation slides to investors for the cap raise were more positive!).

@DrPete , I would research who the new investors are but flying to Rome for work shortly on qantas and our national carrier still has very limited internet (only over Australia, not sure why). Like you, I would hope they are in for the long haul and see value although they would want to update their research a little!.

Cheers!