Small Business Finance: A Case Study of Two Australian Firms Recently Listed in the Australian Stock Exchange You name, 220078861 AFM422, Small Business Finance Length: 1,138 words Dr. Michelle Goyen October 3th, 2011 Small Business Finance: A Case Study of Bega Cheese Company and Cradle Resources Company Limited According to the Bega Cheese company website, Bega Cheese Company was formed in 1899…
The value-added cheese is packed in slices and distributed to retail shops. According to Australian Stock Exchange, Bega cheese limited was listed in the Australian Stock Exchange on August 19, 2011. Cradle Resources Company Limited, on the other hand, is an Australian company dealing with mineral drilling and exploitation as Australian Stock exchange website states. The Cradle Resource Company website states that the Company also deals with exploitation and development of economic minerals. It was officially listed in the Australian Stock Exchange on September 16, 2011 according to the Australian Stock Exchange website. The Bega Cheese Company website provides a brief history of the company. The Bega is wholly owned by dairy farmers in North Bega, Australia. Bega was a cooperative society until its listing in the Australian Stock Exchange. It was headed by a chief Executive officer who reported directly to the farmers. The company seeks to add finance in order to get more money to invest in the market. Bega Foods has secured many contracts since its listing in Australian stock exchange. For example, the company was awarded a contract on 7th September 2011 to supply the Coles’ brand of cheese. ...
According to the Cradle website the main reason for Cradle Resources Limited to list on Australian Stock Exchange is therefore, to seek capital to expand its activities in Pilbara, Northwest of Western Australia. Cradle is focusing its activities on exploitation of iron and metal assets in Western Australia and beyond. The share offer of both companies was underwritten. Iannotta (2010) defines an underwriter as an investment financial institution such as an insurer or investment bank that initiates the public offer for shares of a particular company. The main reason for underwriting is to provide additional finance for the company and purchase the remaining unsold shares (Iannotta, 2010).The underwriter becomes a shareholder in the company until the shares are sold. The company has to pay the underwriter a premium for the shares that are underwritten. According to Australian Stock Exchange website, Bega’s initial public offering was met with excitement as investors rushed to buy shares from the company. Cradle, on the other hand, is a mineral exploitation company. Mineral exploitation ventures to have the longer payback period. Although mineral exploitation has a longer payback period, the returns are high. Cradle shares are falling as Bega’s stock price continues to rise. Furthermore, the two companies had to find underwriters as required by law under the Australian Stock Exchange Act (Dagwell et al, 2007) According to Gerven (2008), a company must lay down all the major decisions that a potential investor requires to know such as activity of the company issuing shares, issue of shares, the sale of shares and the payment of dividends. Gerven (2008) says that a prospectus also shows the financial position of ...
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