Daily analyst comments
Nutritek shareholders against SPO
05.04.10 10:26
Nutritek shareholders’ refusal to participate in an SPO means the company may not ask for additional funds, which exposes it to an increased risk of bankruptcy.
The bulk of Nutritek shareholders said at a BoD meeting held April 2 that they were not to participate in the company’s previously declared follow-up offering, Kommersant newspaper reported. The official reason why the shareholders are unwilling to invest additional funds in the company has not been disclosed.
We assume that the shareholders could be frustrated by Nutritek’s opaque business-model, insufficient level of internal control, and its high debt load: Nutritek’s debt is presently valued at USD 210-220 million. All these factors give rise to uncertainty over the company’s future. In our opinion, Nutritek lacks the necessary ways to attract additional capital apart from an SPO, and the refusal to hold a follow-up offering, therefore, means the company could be deprived of extra funding. This could pose much graver risk of company going bankrupt, as it currently faces a serious lack of idle funds necessary for the proper servicing of its debts.