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DAR has called a special vote to increase the stock shares. Should we vote for or against?
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against! Dilution = badness
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against! Dilution = badness

Well, it depends on what the dilution is for. This vote does not create a dilution, just the option for a future dilution that will either raise cash or be used for acquisitions in lieu of cash (or, to grant more stock options and blocks to company employees, a practice I do not like if they are not properly expensed). From the proposal:

We currently intend to access the capital and loan markets in the near term to raise equity and debt. If you
approve the amendment to our restated certificate of incorporation to increase the number of authorized shares of
Common Stock as described herein, we may in the near future and from time to time conduct one or more public
offerings of shares of our Common Stock, including shares of Common Stock authorized pursuant to the
Proposal.


If they use the authorization to offer a secondary offering, the cash raises the health of the company's balance sheet, and if you trust management to use it wisely, it can help the company grow. Of course, if you feel the stock is undervalued, an offering might NOT be a great use of the shares since they company is essentially putting its ownership on discount for sale.

I think that Darling's management has used pretty good judgment in its acquisitions and its startup of Green Diesel, so I think I will support this proposal.

cicciano
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Recently, DAR purchased Rothsay and is about to finish the acquisition of Vion.

The former was more modest ($645 million Canadian)and they indicated they would finance it by issuing debt.

That latter is much heftier at 1.6 billion euro - effectively doubling the size of Darling.

now, they didn't specifically say they would issue new shares to pay for it, so i was a little surprised to see the email.

when they announced the Vion acquisition, they said:

Darling plans to finance the transaction through a combination of bank debt, public debt and equity, and expects this purchase, excluding one-time charges, before synergies, and pro forma for financing to be immediately accretive to earnings per share.

This is a link to the proxy you are referring too: (opens as pdf)

http://b2i.api.edgar-online.com/EFX_dll/EdgarPro.dll?FetchFi......




the Board believes that it is in Darling’s best interest to increase the number of authorized shares of Common Stock in order to have
additional authorized but unissued shares available for issuance to meet business needs as they arise, including, without limitation, the
repayment of certain of our existing or future indebtedness.


They do say that the additional authorization is not a pre-req for the acquisitions and they hope to use capital and loan markets to finance same… perhaps they want the flexibility of the offering if things get tight?


The increase in the amount of authorized Common Stock, to be effectuated by the amendment to our restated certificate of incorporation to be voted on at the Special Meeting, is not a prerequisite to, or necessary for, the completion of the transactions contemplated by the Acquisition Agreement and the SPA.


We currently intend to access the capital and loan markets in the near term to raise equity and debt. If you approve the amendment to our restated certificate of incorporation to increase the number of authorized shares of Common Stock as described herein, we may in the near future and from time to time conduct one or more public offerings of shares of our Common Stock, including shares of Common Stock authorized pursuant to the Proposal. The timing and size of any Common Stock offering or other financing transaction will depend on the then-existing market conditions and other factors, including the discretion of the Board. The proceeds of any such Common Stock offering or other financing transaction may be used for general corporate purposes, including, without limitation, to consummate currently contemplated or future acquisitions, for working capital purposes and/or to repay indebtedness outstanding at the time of any such offering (including repayment of the Commitments). There can be no assurance that any such offering or other financing transaction will occur or will be successfully completed. This Proxy Statement shall not constitute an offer to sell or the solicitation of an offer to buy any securities.


It is always a concern when a company issues new shares. Darling also issued new shares they they bought Griffin a few years back - that went quite well. We shall see.

Greg
MRH Ticker Guide
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