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Gold/Mining/Energy : Dorel Industries (DII.B , M or T) good earnings report
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To: Jay Arkay who wrote (35)4/15/1998 12:54:00 PM
From: Jay Arkay  Read Replies (1) of 96
 
Announcement of large block of Dorel class B shares being sold:
fin-info.com
There are 2.85 million shares being sold, 2.45 million of which are from the estate of the founder. The other 400,000 shares are new treasury stock that Dorel will use to augment working capital and reduce debt associated with the acquisition of Ameriwood Industries. The market doesn't like this initially, with shares falling to $47 after the announcement (and the bid a good deal lower). However, I think that this is either a non-event for the company or more likely a good thing. First, none of the four senior managers (including founding family members) are selling any of their holdings. Second, this sale will considerably increase the public float of the company and raise liquidity for what is clearly a rapidly growing company, one that should attract increasing institutional ownership over the next few years. Third, the relatively small new share issuance will help Dorel to finance its major new acquisition without excessive debt but also without large dilution. It may take the market a while to digest this news, but Dorel will be a stronger company and a more attractive investment for it longer term. Jay
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