As we have previously covered, Energy One (ASX: EOL) had to raise capital at quite a discount, amidst the equity market sell-off in March. The result of that capital raising was that certain investors, as well as company team-members were given the opportunity to buy shares at $2.20 per share.
In my view, this was an attractive price for Energy One shares.
However, a number of small shareholders such as myself were upset that they did not get to participate in the capital raising at that price. From that place of initial disappointment comes a heartening tale.
As a group, micro-cap investors know that it’s always worth reaching out to management. But when I got in touch with the CEO of Energy One, I was pleasantly surprised. First, I was swiftly referred to the Chairman, who took the time to chat with me about how smaller investors were feeling left out. I’m sure he also talked to others.
Next, the company announced a share purchase plan (SPP) for small investors. While that was a positive step, it seemed likely that the company would scale back the offering which would be oversubscribed, reflecting the attractive pricing.
Happily, the company then took the decision to increase the SPP allocation to allow all those who applied to receive their full application. It said:
“EOL originally announced a targeted cap of $750,000 for the SPP, but has increased that target to $1,815,000, to acknowledge the oversubscription for the SPP. As such SPP applications will not be scaled back.”
Given these shares will be issued at more than a 25% discount to the prevailing share price of $3.62, many small holders will likely be feeling rather grateful. I certainly am.
In my view, this is rather convincing evidence that small retail investors can trust management and the board of Energy One to take into account their interests and treat them fairly. This is a reasonably rare quality in the micro-cap end of the ASX, which sometimes resembles a cesspool of dishonesty and graft.
Energy One (ASX: EOL) sets itself apart with its recent actions and I find my conviction in the investment is only strengthening. Obviously, I hold shares, but they were purchased at lower prices, and this is not a recommendation or advice.
Rather, this is merely a reflection on a single positive development pertaining to the quality of the company’s leadership.
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This post is not financial advice, and you should click here to read our detailed disclaimer. The author owns shares but will not trade them for at least 2 business days (inclusive of today) following this article.
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