HGH - Heartland Group Holdings

[Stoploss]

At the risk of sounding stupid, why is there such speed on the placement today?
Why have to review offer, make decision, and have available cash sitting around all on the same day? Also both the placement and SPP seem unfair to any shareholder who doesn't have cash sitting around to get the (bargain) discounted shares and stop some dilution of their holding.

The SPP isn't today so you have time to get some funds and participate in this.

[winner (n)]

At the risk of sounding stupid, why is there such speed on the placement today?
Why have to review offer, make decision, and have available cash sitting around all on the same day? Also both the placement and SPP seem unfair to any shareholder who doesn't have cash sitting around to get the (bargain) discounted shares and stop some dilution of their holding.

Raven - the big end of town plays the game different from the minions

[Raven]

The SPP isn't today so you have time to get some funds and participate in this.

Sure, but the placement is all today.

[Left Field]

Sure, but the placement is all today.

I agree the timing and the speed of this cap raise is v unusual.

[Old mate]

I reckon some people have got day jobs.

[LoungeLizard]

Not sure about this SPP. Unless you've got a wad of cash lying around to participate then it will dilute the value of your holdings, reduce EPS and therefore put pressure on Heartland to maintain the current yield. I expect the SP will take a big hit once trading commences - maybe even eventually setting at around the $1.80 offer price.
The discount offered is about 13% - similar to the 15% discount when NZX did it's SPP in Feb. That didn't turn out well for investors. The SP went from about $1.73 to $1.40 (the level of discount) and hasn't recovered since. These sort of placements tend to work out well only for the Insto's who can mop up huge holdings at the reduced rate. A bond issue would have been much fairer all round.

[Raven]

Yes, nothing about this seems particularly fair to all shareholders.

[Plata]

I am pretty confident it will go under $1.95 within the next 30 days, not so sure it will reach $1.80 though so hedging my bets. Regardless, not very pleased with this...

[Basil]

Size of the discount and speed of the placement surprised me a bit.  Fortunately the wily old hound has learned to always keep a few bones buried away for occasions such as this so I put my hand up for a few in the placement.

I'm looking long term here.  Sure, short term during tougher economic times there's no great shakes with eps growth but they have a superb track record of same over the years and over the medium to long term going forward I am sure my additional capital invested will reap me rewards.

Better off going in here than into some old boat that leaks and is a deep and endless money pitt.  (needed to get that off my chest after a proposed acquisition I have been working on for weeks hit the rocks today).

[Minimoke]

Trading at about the same level as it was a year ago. A bit of a divi in that time (no improvement this year)and now a major dilution at a heavy discount in obscene haste with absolute disregard to small holder. I smell something rotten. So wont be throwing any more money at it.

[LoungeLizard]

I still think that this move wrong foots so many smaller investors like myself. It has given me pause for thought and made me re-evaluate HGH. Previously HGH was attractive both for it's growing yield and for the steady growth in it's SP. Both of those are going to take a hit. The SP will go backwards and stay there for some time and there's a risk that divvy growth will stall or even go backwards. All this at a time of 7% inflation. They should be putting any expansionist ideas on hold, and certainly not be using shareholders to fund those ideas. Issue some long term corporate bonds and let insto's fund it that way. Ma and Pa shareholders getting caught in the crossfire yet again.

[SuperMario]

Hmmm, rambling some high level numbers.

Currently:
- market cap $1.25 billion
- 592,903,820 shares

After the raise if using $1.8 share price:
- 592,903,820 shares + 200,000,000/1.8 = 704014931 shares
- 704014931 * 1.8 = market cap of $1.26 billion ... interesting how it roughly equals current market cap

After the raise if adding $200mil to market cap:
- 704014931 shares
- 1.45 billion / 704014931 = $2.07 share price ... interesting how it roughly equals the ex-dividend adjusted price they use in their equation

Am I playing around with coincidental equations and seeing something in nothing? Is the $1.80 price actually at a discount?

The increase in shares issued is 18.74% and the estimated increase in NPAT is roughly 14.6%-19.87%

So EPS is likely to decrease for the year by a few %.


Let's say you have 1000 shares at $2.12, currently $2120, bring them down to $2.07 so you're down $50. Let's say you get allocated 18.74% of your holdings so 187 new shares at $1.80 and if you bring them up to $2.07 you gain about $50. So from that perspective you're even, yeah?

So looking at the big picture, $1.80 is actually at a premium of a few % due to the impact on existing shareholders because of EPS decreasing?


Thoughts? Or am I talking rubbish?

[Shareguy]

Have been busy today so was unable to spend anytime on this when broker rang. Decided to apply for a modest amount to avoid dilution.  Going through all the info there is certainly a few concerns.

[Minimoke]

Seems to me a great strategy for flushing small holders off the register

[Basil]

To be fair about this there has not been, much / any ? mention on here today of the share purchase plan for small shareholders with the right to apply for up to $50,000 of shares at the lower of the placement price, $1.80 or a 2.5% discount to VWAP.  HGH might also allow oversubscriptions in this regard.
It seems some people want to blame HGH for their own choice to be fully invested and their own choice not to retain any cash reserves for special opportunities.   Is it Heartland's fault the choices people make for themselves about their own portfolio allocations ?
Sorry...I don't see any basis for the bleating.