Rights issue worries?14 Sep 2022 13:48
I wonder if the fall in the share price is due to concerns over a possible rights issue. The company ended the year with only 37 million in cash compares to £117 a year previously.
Cash flow from operations is less than £20m and is largely absorbed by the dividend. They have an undrawn borrowing facility of £420m, but unless the rate has been fixed at pre-inflationary levels, it may be unattractive to borrow. Whatever the rate, interest payments will eat into free cash flow. The company needs cash and it’s not clear where it is coming from, hence the correction?