Wednesday, 12 June 2019

CRCT M&A: Investors are not happy.

Here is a simple calculation if this M&A is DPU accretive. NPI will increase 22.8%, to have a DPU neutral result after a rights or placement. The amount of shares should not increase more than 22.8%, hence not more than 227.66 million shares.

Gearing is 35.5% on 31 Dec 2018, assuming a max of 40% gearing, there a $136.53 debt headroom and the divestment of wuhu to be completed in 2H 2019. This mean $347.70 has to be funded through rights or placement. At $1.50 each, CRCT need to issue 231.8 million shares. 

Let's face it, the price isn''t holding well, probably will drop even lower which mean it is not DPU accretive.


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