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Triangle Capital Corporation Message Board

  • smithlewis89 smithlewis89 Aug 11, 2014 10:10 PM Flag

    14% dilution ?

    Am I doing the math correctly ... looks like 14% or so. Kinda snuck that one in on me.
    89

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    • I wouldn't look at this secondary as "dilution."

      Yes they are adding additional shares, but this secondary will be highly accretive to NAV & NII per share for existing shareholders.

      TCAP is netting $25.81 per share from this secondary. Add the new equity raised to TCAP's previous net equity, and then add the new shares to the previous share count.

      $445,774,416 -- Q2 net equity
      $110,983,000 -- New equity from secondary ($25.81 x 4.3mm new shares)
      ------------------
      $556,757,416 -- New net equity

      27,939,795 -- shares outstanding at end of Q2
      4,300,000 -- New secondary shares
      ----------------
      32,238,795 -- New share count

      Then divide the new net equity by the new number of shares. That will get you TCAP's new NAV of $17.27. That's better than an 8% increase in NAV, plus I haven't factored in the over-allotment shares which most certainly will be sold.

      In addition, once this new capital is deployed, it will easily be accretive to NII for existing shareholders. Keep in mind TCAP has already funded about $58mm in new investments in July which accounts for about half the new capital being raised today.

      Secondaries like this highlight why the strong have major advantages over the weak.

      RC

      Sentiment: Buy

    • I'm pretty often wrong on this kinds stuff, but isn't the dilution of 1 mil shares to an existing outstanding pool of +/- 29 mil shares more like 3.5%?

    • Seems as though most companys go around 20 to 25% when they want to raise cash, so this seems in line with their conservative business approach. Q1 earnings call said revenue streams would be lower in the first half due to investment timing, they may feel the need for a larger war chest.

      This could be a real bargain under $26.

      Sentiment: Buy

 
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