25-Apr-2020: https://www.livewiremarkets.com/wires/bhs-thematic
"Opportunity or emergency? A guide to assessing capital raisings"
PET (Phoslock Environmental Technologies) are raising capital today (07-Apr-2020).
Saw this note this morning: "APT and WES could be next in line to tap the market for funds. Citi is reportedly running a significant equity raising today with APT and WES potential candidates." (from the MarcusToday newsletter).
OSH (Oil Search) and SXL (Southern Cross Austereo Media) were raising yesterday, in addition to REH & AIA.
Also, GEM (G8 Education) went from a trading halt yesterday into a trading suspension today, in much the same way the WEB and FLT did in the past fortnight prior to raising capital, suggesting strongly (to me at least) that they (GEM) will also be announcing a raising shortly.
In this 02-Apr-2020 Livewire article: https://www.livewiremarkets.com/wires/how-to-survive-the-2020-bear-market
...Rudi Filapek-VanDyck (from FNArena.com) includes a section titled "Capital Raisings And Other Risks" - and I've included some of it below:
Locally, I believe one key risk for retail investors is that companies will announce capital raisings to either pay off debt/fix the balance sheet, or make sure they don't run out of cash.
As already shown by recent examples provided by Cochlear ((COH)) and oOh!media ((OML)), these additional share placements are executed at significant discounts, even after the share price shellacking, and retail investors might not be offered the opportunity with all the spoils reserved for cashed up institutions.
Depending on specific circumstances, large capital raisings at depressed share price level not only weigh upon the share price, they also dilute a significant share of the future upside potential. In the above two examples: this will prove more so the case for oOh!media and less so for Cochlear.
Investors should check their list and/or portfolio because many more of such capital raisings will be announced in the days, weeks, and months ahead. You can pretty much consider this a personal guarantee.
Those with a healthy memory will remember fresh capital raisings equally became one of the defining features during the Bear Market of 2007-2009.
This time around, companies that are being mentioned as a likely candidate for fresh raisings include Tabcorp ((TAH)), Star Entertainment ((SGR)), Oil Search ((OSH)), Woodside Petroleum ((WPL)), Boral ((BLD)), Computershare ((CPU)), James Hardie ((JHX)), G8 Education ((GEM)), Link Administration ((LNK)), Ramsay Health Care ((RHC)), Transurban ((TCL)), Sydney Airport ((SYD)), McMillan Shakespeare ((MMS)) and Vocus Group ((VOC)).
The problem for most companies is that business spending plans and balance sheets all date from pre-February and none incorporate an extreme economic shock as is currently upon us.
Many will try to avoid raising fresh capital through deferring spending, reducing costs and (if they can) sell assets or take on more debt, but a number of companies might also simply move early in order to "get it out of the way".
Those who wait until they are forced to execute quickly will be subjected to larger discounts. That's how this works.
Investors should note Bapcor ((BAP)) was seen as a likely candidate for a capital raising, but management organised an investor call on Friday assuring there would be no new equity required.
If somehow I have now given you the impression that investing in the share market in 2020 is a lot more complicated than simply buying into a cheap looking stock, then damn right you are getting the message.
In terms of macro-risks, the most obvious is the sinking oil price, of which I am 100% certain investors are underestimating the impact on the industry's spending, profitability and balance sheet vulnerability.
There is no doubt in my mind the significant fall in the price of oil will trigger a lot of negative news in the USA where a direct link exists into high yielding corporate bonds.
It is difficult to predict when exactly, or how this process will play out, but I have little doubt the world is watching this very closely.
Investors who are not sitting on the sideline with a load of cash, should use every opportunity to re-adjust their portfolio for the fact that the world has now changed rapidly since mid-February.
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