Vitalij \u0160ostak, co-founder of PLY Analytics, commented in a Verslo \u017einios article on Baltic Horizon Fund\u2019s planned new share issue, describing it as a \u201clifeline\u201d the fund is seeking from its investors.<\/p>\n\n\n\n
\u201cEssentially, it is hardly possible to interpret this issue in any other way, as no one issues offerings of this kind out of a good life \u2013 offerings whose size exceeds the entire market capitalization, around EUR 22 million, and whose price is 73% below net asset value,\u201d noted V. \u0160ostak. \u201cOf course, it is not clear what the outcome of the placement will be, but the issue is truly a necessity. Perhaps only the scale was somewhat surprising.\u201d<\/p>\n\n\n\n
The commentary analyzes the fund\u2019s financial situation, the scale of the issue, and possible scenarios. According to V. \u0160ostak, while the new issue is a right and necessary step, it is likely to be only a temporary solution to the fund\u2019s structural challenges, and more radical measures related to changes in the portfolio structure may be required.<\/p>\n\n\n\n
The expert also emphasizes that a significant portion of the raised capital may be used not only to reduce loans but also to cover the free cash flow deficit: \u201clooking at the cash flows, we see that operating cash flow, after interest and CAPEX, stands at negative EUR 3.8 million. It appears that part of the cushion that may be built through the new issue will have to be used to cover this operational gap.\u201d<\/p>\n\n\n\n