Well, net debt rose by R1bn to R2.9bn during the first six months while capex committed to Dec comes to another R0.9bn. For 2012, a further R750m is already committed excl. any additional capital expansion at the Maputo and Richards Bay terminals - the real growth projects. Pressures in the shipping market have probably placed cash flow budgets under significantly more strain than originally anticipated. Issuing shares to a third party with a claw-back option to existing shareholders is probably faster and much more cost effective than a rights offer which in the current market would have attracted a sizeable discount. If the shares are issued at say 1325cps (30-day volume weighted), this would also be at a premium to book of 1177cps. R2bn raised at this price would require the issue of 150.9m ords, equivalent to a one-third increase in outstanding shares. Given that GND has moved into a net interest paying position, the issue would not be excessively earnings dilutory in the short-term. Nevertheless, not sure that I would be too thrilled if I was a shareholder.
