CybAero

CybAero issue complete

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Well, the CybAero issue is complete. The subscription period ended on the 4th. On the 10th the result came: current investors subscribed for a little less than 50 %, outsides subscribed for 2 % and guarantors covered the remaining 48 %. In other words, the issue was far from fully subscribed and the amount raised is only 90 % of the amount planned.

The issue raised 115.2 MSEK (planned 128), which of course forces the company to revise their plans to some extent.

The question I ask myself is why CybAero notoriously have difficulties when it comes to finding 1CybAeroinvestors willing to open their pockets. They had problems in 2015 where the company did not succeed with a private placement, forcing them to make a public issue a few months later. The public subscription was extended but eventually oversubscribed. And now we are in a situation where only half of the current investors participate – and the company cannot attract any new investors.

Probably the answer has to do with the delayed systems for the Chinese Customs. Initially the contract was signed in January 2014. The delivery was planned in the second half of 2014. Then they were delayed, and then delayed some more. Then 2015 ended. 2016 began. In June the deliverance and payment was planned in late August. The systems left the factory on August 31th but, but, but some tests still remained and payment was then moved to September/October. In Start-October this was again delayed and tests was about to start End-October or Start-November – and now we are in Mid-November and the systems are still not paid nor finally accepted. If the final tests were completed before or during the subscription period, the outcome could have been different, I guess.

The only cure for this disease is simple. Deliver the systems, get new orders and deliver on time – again and again. Only then investors will regain full confidence.

Share price

The issue price was 4 SEK – and since November 4th the market price has been below. On Friday 11th the price was 3.66 SEK – 8.5 % below the issue price.

I participated fully in this issue. As I did in the issue in 2015. At then, the issue price was 7 SEK, and I could subscribe 1 share for every 2 shares I held. The average price I have paid for new shares in these two issue are therefore 4.8 SEK. At present my loss by participating in the two issues is 24 % – not counting my initial position which I bought at a price far above the last issue price. Up until now CybAero has only cost me, probably my worst investment so far.

It hurts, of course, then to see the price go down and even fall below the issue price.

The coming months will be crucial. Can the company deliver the systems in China and get the full price? Will they succeed in landing new orders? And deliver on time? There is a plan to diversify the business by renting out the systems, will that be a success? If all the answers are ‘yes’ there is no doubt that the share will regain some of its value. If not, the best vi can hope for is a bid from a competitor wanting to buy the inventory and the technology – since investors clearly are not willing to invest any further.

Find the press release here. My latest post on the issue is here.

Check out my growth share portfolio, the share price trigger list or my EGS (Evaluation of Growth Shares) Model.

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