She’s all good, we just need to raise more money….

A fascinating wee piece in today’s ODT, by Simon Hartley.

‘South Island companies ‘ value drops $166m’.

The fascinating part was where Deloitte partner Paul Munro lauded Kathmandu’s launch this week, of it’s $457 million public offering – seeing it as positive…..

Actually, it’s the previous owners, wanting out. As I recall, they bought it from Jan Cameron – not one to leave any lemon-juice unsqueezed – and, as second-rounders often find, there aint much expansion room left. So, they plan some new sites, project the income from the new sites, and – essentially – offer the outfit for sale? Hmmmmmmm

What has happened is simple. Most of these firms treated boom times as permanent times, and borrowed on that basis. Now they’re looking for cash injections to keep the leverage at bay, and any way you look at it, that reduces current shareholder equity. As it should – after all, the reality was that the equity wasn’t there, other than as  as wishful thinking.

Big-picture, it’s China which is cashed-up, and China which is beginning to own us. Note F&P,etc. This has frightening implications, particularly with the current government’s privatisation push. You end up with ACC, and even parts of education and health, run from behind the bamboo curtain, where the concept of morals and ethics is perhaps different from ours.

Ah well, I guess there’s always nationalisation.

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