AIRASIA (5099) - On Airasia's private placement to the founders
I have written a lot about private placements. Some I am positive, most of them, I am negative. I have written about Airasia's
private placement (PP) the day after the announcement of the PP to the
founders on 2 April 2016. If you read many of my articles on Airasia, I
actually prefer for a rights issue - and I meant it (why not), but if
one is to study the exercise during then - 1 April 2016 (please look at
the below chart) - they can't do rights issue at that point of time.
The share price was climbing from a low of RM0.78 where many would have
thought Airasia was a candidate for bankruptcy due to its debt. There
was not going to be any bankruptcy as their debts are really long term
with strong positive cashflow to support - period.
It will be deemed as Airasia was desperate for funds (from its public shareholders) and that would have been detrimental towards the company. Then, if the founders decided to put in and committed their own money, nobody can complain. If one can remember, the closing price for Airasia on 1 April 2016 was RM1.84 - and that was what the price for PP. There was no discount, unlike many of the PP that are announced i.e. up to 10% discount.
Again, I do not like the PP as I knew the founders gotten them for a good price and based on that article I wrote, if one know how to read the action well, investors could have purchased Airasia then at RM1.84. One would have gotten the shares similar to the PP price.
Again, on PP - one of my holdings - Ecoworld, actually is currently doing a huge PP of 30% (yet to complete as there are many rounds). Theirs to me is very fair. Why? The founders cum controlling shareholders commit themselves first at RM1.30. At one point of time, their shares were traded at RM1.22 and the founders still put in cash for more shares at RM1.30. That makes the entire exercise looks fair.
The one PP that is really bad is WCT's and I still keep my opinion to it.
I hope this explains.
It will be deemed as Airasia was desperate for funds (from its public shareholders) and that would have been detrimental towards the company. Then, if the founders decided to put in and committed their own money, nobody can complain. If one can remember, the closing price for Airasia on 1 April 2016 was RM1.84 - and that was what the price for PP. There was no discount, unlike many of the PP that are announced i.e. up to 10% discount.
Again, I do not like the PP as I knew the founders gotten them for a good price and based on that article I wrote, if one know how to read the action well, investors could have purchased Airasia then at RM1.84. One would have gotten the shares similar to the PP price.
Again, on PP - one of my holdings - Ecoworld, actually is currently doing a huge PP of 30% (yet to complete as there are many rounds). Theirs to me is very fair. Why? The founders cum controlling shareholders commit themselves first at RM1.30. At one point of time, their shares were traded at RM1.22 and the founders still put in cash for more shares at RM1.30. That makes the entire exercise looks fair.
The one PP that is really bad is WCT's and I still keep my opinion to it.
I hope this explains.
