Q: Your thoughts on the deal announced today - seems like a bad time to be raising equity with the price down - what is their debt situation?
5i Research Answer:
We would not consider it 'great' to issue new shares after a 25% decline. However, managment notes 'our business continues to perform beyond our expectations' and it does have US growth initiatives. With the discount on the offering we would expect the stock to decline a bit. We still like it overall, but it will take a while for the market to absorb this issue, and we would certainly like to see better momentum here. We would be fine buying an initial position in the decline with a view to add later. TSU has $2.4B in insurance contract liabilities, but corporately has a large net cash position.