New share issues

[goponcho]

Hi,

Am evaluating a company for a long term buy (SHV)
Seems to have a good ROE and expanding sales.
It however in 2015 issues capital raising of 20% of existing number of shares, in order to fund expansion. There doesnt seem to be much discussion in the annual report about it either.
Its debt is moderate with long term debt: equity at 1:3.

Is this necessarily a bad thing which dilutes the other existing shareholders % of the company?


How do i think about this?

Thanks!

 

[So_Cynical]

How was the money spent, did it buy extra immediate revenue or extra revenue down the road a little, reduce debt, refinance debt, you have to decide if the dilution was worth it, did it add value or was it wasted.

For example:

STO just did a 1 billion dollar placement that diluted holders by 15%, they had massive unmanageable debt and after the dilution will have a lower debt burden that is more manageable.