Regular readers of this blog will know that I am not a fan of private placements (PP).
If a company really needs money then a rights issue is much more fair, all investors will have the opportunity to participate, and those we don't want to can sell their rights in the market.
When a company's major shareholders are engaged in a battle for control and the company announces a PP, then alarm bells should go off.
Lay Hong is such a company, which announced a large private placement, combined with a substantial SIS (Share Issue Scheme).
I am also not a fan of SIS or ESOS either, I would prefer a system where employees receive a bonus for hitting some long term targets. That seems much more transparent (for shareholders) and fair (for employees).
"Serious Investing" wrote a good article about the Lay Hong private placement.
MSWG wrote the following in their newsletter of February 6, 2015:
MSWG has a very valid point, Lay Hong's earnings track record is not that great, can it really increase earnings by such an amount that the dilution caused by the PP and the SIS will be offset?
From it's last year report:
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