For Constellation Healthcare's (CHT) retail shareholders, this week's $20m private placing of shares at 140p - a 25 per cent discount to the market price - is a test of trust. The stock fell 13 per cent as smaller holders took profits or bailed out on news of what effectively amounts to a 4 per cent dilution based on the 17 per cent expansion of the number of shares in issue.
The funds will be deployed in buying smaller US medical billings firms. Constellation has signed letters of intent with six targets, each of which has revenues and cash profits over $10m and $1.5m respectively.
Broker finnCap, which downgraded this year's EPS forecast from 17.1¢ to 15.6¢ against adjusted pre-tax profits of $15.6m, reckons just two completed deals would give a 17 per cent uplift on next year's 17.2¢ forecast.
