Healthzone Horribly Out of Shape

We’ve seen a lot of companies fall from grace spectacularly in the last five years, but the recent demise of Healthzone Limited (HZL) deserves special mention. On 20 October this small-cap health food operator raised nearly $10m in fresh equity. It didn’t look stupidly indebted to start with – $17m of debt versus $7m of EBIT – but investors presumably assumed that the extra $10m of equity would leave the balance sheet indestructible. A month after the capital raising,  Commonwealth Bank forced the company into receivership. In Dissing the Bluescope Capital Raising I wrote about the folly of throwing...

We’ve seen a lot of companies fall from grace spectacularly in the last five years, but the recent demise of Healthzone Limited (HZL) deserves special mention.

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