This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

If you could get a coronavirus inoculation this afternoon, you probably wouldn’t care if the clinician told you that the shot might feel a bit chilly. But when it comes to hiring employees or judging which vaccine is going to sell better, it pays to know the difference between candidates that don’t need special help to keep their cool and those that need to be beyond ice-cold to have a chance at success. 

Will Moderna Inc‘s (NASDAQ: MRNA) newly proven vaccine outperform its competitor made by Pfizer Inc (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX), which is likely to obtain regulatory approval and subsequently hit the market at roughly the same time? Early signs say yes, but not for the first reason that may come to mind.

You can’t just throw your vaccines into any old fridge

Moderna’s mRNA-1273 isn’t any more effective than Pfizer’s candidate when it comes to preventing infection. Both are protective at around 95% effectiveness. The pair also seem to have similarly mild side effect profiles, so with all else being equal, there’s no clear favorite. There is one small difference that probably will make mRNA-1273 capture a larger market share and deliver better returns for investors, though. Its advantage is that it doesn’t need to be stored at super-cold temperatures.

Many vaccines need to be stored in a cool environment to avoid spoilage. For mRNA-1273, a standard refrigerator is cold enough to preserve it for up to 30 days. If it needs to be kept for longer, it’ll require storage in a standard freezer instead. Then, clinicians will thaw doses and move them to the refrigerator shortly before people get vaccinated. It’s clear that most healthcare facilities in the United States have the right equipment to meet these requirements without buying or doing anything new.

In contrast, the Pfizer inoculation needs to be shipped and stored at a brisk -94 degrees Fahrenheit to remain stable for longer than five days. It isn’t possible to reach temperatures that low in a normal freezer, which means that special ultra-cold freezers are necessary. While many hospitals have access to these colder freezers, they cost upwards of $10,000 each, which poses a major challenge to any smaller sites hoping to distribute the vaccine.

In my firsthand experience, these ultra-cold freezers are also significantly more prone to disastrous malfunctions than the type you have at home. Plus, you won’t find that kind of equipment in many of the most likely distribution points, like doctors’ offices or clinics — they’re typically very large, and they consume a ton of energy to stay chilly. Finally, transporting doses from site to site while keeping them at the right temperature might also pose a problem, even for larger healthcare systems.

Can Pfizer and BioNTech bring their vaccine in from the cold?

Pfizer has a plan to keep its doses chilled to the appropriate temperature during transportation and storage. After designing a special cold shipping container, it has also developed a complex new distribution system for just-in-time delivery to clinical sites. If it works, it will reduce most of the barriers to procuring the inoculation. Nonetheless, the system is untested, and it wasn’t developed in conjunction with the company’s traditional logistics partner companies like McKesson Corporation (NYSE: MCK). It’s also unclear how expensive it will be for Pfizer to operate. Management has hinted that future formulations of its candidate might even be tolerant to the balmy temperatures of a standard freezer.

For the moment, Moderna’s vaccine has none of these problems to overcome. So, when faced with procuring Moderna’s easily stored vaccine or Pfizer’s more cumbersome one, it’s hard to see why a customer in a healthcare system would pick the latter. Pfizer and BioNTech will probably still sell millions and millions of doses, but unless they can definitively solve their issues with frostiness, Moderna will have a clear path toward a much larger market share.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends McKesson. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Investors all around the world would probably be a fairly happy bunch right now. Our own S&P/ASX 200 Index (ASX: XJO) is currently hitting the highest level since late February this year. That was when the ASX 200 was in the midst of the coronavirus market crash. It’s also up more than 10% since the start of this month.

Over in the United States, it’s a similar story. The flagship Dow Jones Industrial Average (INDEXDJX: .DJI) index is sitting pretty close to an all-time high after gaining more than 57% since 23 March. And again, more than 10% since the start of November. That’s some confidence-boosting statistics, to be sure.

We can point to the announcement of several promising COVID-19 vaccine candidates as the likely cause for this surge in optimism on the markets.

Double-dip recessions and stimulus

Yet, reporting from the Australian Financial Review (AFR) today isn’t painting such a rosy picture for the future. According to the AFR, advisors to the new US President-elect, Joe Biden, are “planning for the increasing likelihood that the United States economy is headed for a ‘double-dip’ recession early next year”.

The president-elect’s advisors are reportedly concerned over a renewed wave of COVID-19 infections across the US. As well as a looming threat of a cliff edge for jobless benefits that are scheduled to expire in December. That comes “amid a wave of evictions and foreclosures” across the US as well.

The President-elect’s team is purportedly in negotiations with US congressional leaders like Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell for another recession-busting stimulus package.

But these negotiations are reportedly stalling for now, with major differences between the 2 parties on how much money should be spent and where. The Democrats (Mr Biden’s party) are apparently pushing for a large US$2 trillion package. The Republican party is gunning for a much smaller package in the US$500 billion range.

Mr Biden’s team has also reportedly received advice from economists indicating that the US economy will begin to shrink early next year unless the stimulus impasse is broken. This advice flags the possibility of job losses amounting to more than 3 million in the first half of 2021 and a return of an unemployment rate above 10%.

What does this mean for ASX shares?

If there is indeed a ‘double-dip’ recession over in the US next year, it would almost certainly be bad news for the ASX 200 and ASX shares, not to mention the global economy. There is that saying “when America sneezes, the rest of the world catches a cold” for a reason.

More reading

• G8 Education (ASX:GEM) share price rebounds after lawsuit news
• ASX 200 up 0.7%; Zip trading update, Ampol buyback, IAG sinks
• ASX 200 events this week that could move the market
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Cann Group Ltd (ASX: CAN) share price has started the week in sensational form.

In afternoon trade the cannabis company’s shares are up a sizeable 13% to 35 cents.

Why is the Cann Group share price rocketing higher?

Investors have been buying the company’s shares on Monday after it provided an update on its debt facility.

According to the release, the company has received credit approval from National Australia Bank (ASX: NAB) for a $50 million secured debt facility. Management expects to complete the execution of documentation with the banking giant within the next month.

Why does Cann need a $50 million debt facility?

The release explains that the loan is a construction facility which will be used by Cann to complete the first stage of its state-of-the-art medicinal cannabis production site near Mildura.

Management advised that it is being provided through NAB’s agribusiness division, which it feels represents a strong endorsement of its strategic growth plans.

It notes that the approval clears a path to recommence construction at the Mildura site, with work expected to be underway in February 2021.

The first stage of the Mildura site has an estimated 9 month build time, with first product expected to be processed and released by March 2022. This will come at a total cost of $112 million, with $53 million already spent on site works and the facility superstructure. The balance will be funded by the new bank loan facility and current cash reserves.

Once complete, the first stage of the project will provide annual capacity to produce 12,500 kgs of dry flower equivalent. 

Cann Group’s CEO, Peter Crock, commented: “The commissioning of production at Mildura is an important step in Cann’s plan to produce GMP certified medicinal cannabis at scale. The facility will utilise world-leading technology, providing Cann with a globally competitive unit price based on substantial economies of scale.”

“Securing the support of a tier one bank is a strong validation of our strategic growth plans. Given the building demand for our products, we have the confidence to immediately ramp up production as soon as the facility is ready,” he concluded.

More reading

• Why Ampol, Cann, Fortescue, & Mesoblast shares are surging higher
• Why ASX shares are in awesome shape vs overseas markets
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• What would it take for the ASX 200 to hit 7,000 again?
• Why ASX bank share dividends might be surging soon

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Worley Ltd (ASX: WOR) share price received a boost in today’s trading after analysts at Goldman Sachs rated the company a Buy, and raised the 12-month price target by 27% to $15.70. Following the announcement, the Worley share price lifted 2.43% to $12.42.

Why did Goldman rise its target share price

Goldman believes that Worley’s exposure and transition to renewable energy projects will drive earnings growth and reduce its cyclicality. The broker says that Worley is well-positioned to leverage its expertise as the industry transitions from fossil fuel to renewable energy. 

As a result of this industry pivot, Goldman believes that Worley’s sales will grow from an estimated $345 million in the 2020 financial year to $2.5 billion in the 2025 financial year. Worley’s revenue share from renewable energy’s projects will also grow from 5% of total earnings before interest and tax (EBIT) currently, to 22% in 2025, the broker says. 

This forecasted revenue, combined with its exposure to the chemicals industry, will increase Worley’s non-cyclical end-markets from 48% currently to 65% in 2025. 

What else did Goldman say?

Goldman says that its analysis was made on the back of an International Renewables Energy Agency (IRENA) forecast showing that $49 trillion to $78 trillion of investment will be made by the industry globally towards the renewable sector by 2030 across various emissions scenarios. It says that while Worley’s direct exposure only represents a small percentage of these trillions of dollars, it still translates to around $489 billion of the pie over the 10 year period. 

More reading

• Macquarie (ASX:MQG) picks best ASX stocks to buy for 2021 post-COVID recovery

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Recce Pharmaceuticals Ltd (ASX: RCE) share price is shooting up today, after the company announced that it has been granted a patent for its Recce 327 and 529 formulations from the Japanese Patent Office (JPO).

At the time of writing, the Recce share price is up 5% to $1.14. In comparison, the All Ordinaries Index (ASX: XAO) is 0.6% higher to 6,780 points.

What does Recce do?

Recce develops synthetic antibodies that aim to address the global health challenge of antibiotic resistance superbugs. The medical company’s flagship drug, Recce 327, is being developed to treat blood infections and sepsis.

The group operates solely in research and development, and is located in both Australia and the United States.

What’s pushing the Recce share price higher?

The Recce share price is pushing higher today after the JPO granted ‘Patent Family 3’ to Recce’s anti-infectives. Titled ‘Anti-virus Agent and Method for Treatment of Viral Infection’, the patent allows marketing and manufacturing monopolies until February 2037.

According to the release, the patents relate to antibiotic drug Recce 327, and the new anti-viral formulation, Recce 529.

Japan is the second largest pharmaceutical market in the world, only behind the United States. Recce’s Patent Family 3 applications in other major pharmaceutical markets around the world are in their own advanced stages of independent patent reviews.

What did management say?

Recce CEO Mr James Graham commented:

Recce’s intellectual property portfolio continues to grow in-line with our business strategy and the unprecedented global infectious disease crisis before us. At now 31 granted patents across 3 wholly-owned patent families, our market-monopolies reinforce our unique opportunity among a significant range of both bacterial and viral pathogens.

About the Recce share price

The Recce share price has been pushing higher in the last 12 months, with COVID-19 in the backdrop. The company fell to a 52-week low of 21 cents and skyrocketed to an all-time high of $1.87 in September.

Although sitting 39% below its record share price, Recce is continuing to expand its products into new markets and agreements.

The company has a market capitalisation of $197.2 million.

More reading

• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• The Auroch (ASX:AOU) share price rocketed 11% higher today. Here’s why.
• Look out for the Auscann (ASX:AC8) and Cannpal (ASX:CP1) share prices post trading halt
• Why the Global Health (ASX:GLH) share price is surging up today
• Why the DroneShield (ASX:DRO) share price shot up 10% today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The G8 Education Ltd (ASX: GEM) is having a rough time today. G8 shares are trading at $1.26 at the time of writing, a 1.21% rise from where they closed at on Friday. That compares to the broader S&P/ASX 200 Index (ASX: XJO), which is up 0.5% today so far.

It’s been a volatile day for G8 shares. They opened at $1.25 this morning, but quickly plummeted by almost 12% soon after, falling as low as $1.10 just before 11am. But as quickly as they fell, G8 shares rebounded spectacularly, rising slightly higher than open to the $1.26 level we see presently. So what’s going on here?

Why the G8 share price is bouncing around today

We can probably put these dramatic moves down to some news that came out about this education company this morning. According to reporting in the Sydney Morning Herald (SMH) today, law firm Slater & Gordon Limited (ASX: SGH) has filed a shareholder class action in the Supreme Court of Victoria. This class action reportedly revolves around G8’s continuous disclosure obligations back in 2017 and early 2018. According to the report, during that time G8 released a profit downgrade which saw the company’s share price crater by 23% in December 2017.

The SMH reports that Slater & Gordon is alleging that the company had forecast earnings for the 2017 year in the “mid to high $170s million” in May 2017. But in early December it was downgraded to “around $160 million”, and then in February turned out to be $156 million. The class action seems to be alleging that G8 did not adequately disclose this situation to the markets as it should have done.

Slater & Gordon practice group leader Andrew Paull is quoted as saying:

We are alleging G8 contravened its continuous disclosure obligations by failing to disclose to the market information relevant to its Full Year 2017 financial performance… We also allege G8 engaged in misleading or deceptive conduct.

G8 hits back

However, G8 has completely denounced these reports. It released a statement this morning which stated the following:

G8 Education… refers to today’s media reports that Slater and Gordon have filed group proceedings in the Supreme Court of Victoria against G8 alleging breaches of G8’s continuous disclosure obligations between 23 May 2017 and 23 February 2018. G8 has not received any correspondence nor service of the proceedings from Slater and Gordon. Any such proceedings, if served, will be vigorously defended.

Judging by the share price performance of G8 shares this morning, it seems as though investors got spooked by the class action news, only to have their concerns assuaged by the G8 release – hence the ‘sharp V’ that we see in the G8 share price today.

More reading

• ASX 200 up 0.7%; Zip trading update, Ampol buyback, IAG sinks
• ASX 200 events this week that could move the market
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Accent Group Ltd (ASX: AX1)

According to a note out of Citi, its analysts have upgraded this retailer’s shares to a buy rating with an improved price target of $2.09. Citi was impressed with Accent’s recent trading update and particularly its store expansion progress. In addition to this, as a footwear retailer, it believes Accent is well-placed to benefit from consumers going out more now restrictions are easing. It also sees opportunities in high-margin accessories. The Accent share price is up 4% to $1.97 this afternoon.

Lendlease Group (ASX: LLC)

A note out of Goldman Sachs reveals that its analysts have retained their conviction buy rating but trimmed the price target on this global property company’s shares slightly to $16.65. This follows the release of an update at its annual general meeting last week. Goldman notes that Lendlease is targeting over A$10 billion in project commencements over the next 18 months. This is in line with its expectations and expected to underpin solid earnings growth over the coming years. The Lendlease share price is changing hands for $14.37 on Monday.

Serko Ltd (ASX: SKO)

Analysts at Ord Minnett have retained their buy rating and lifted the price target on this travel booking technology company’s shares to $6.55. The broker made the move after the release of a slightly better than expected first half result from Serko last week. Ord Minnett remains positive on the company’s future and notes that its deal with travel giant Booking.com has the potential to be a key driver of growth and share price gains. The Serko share price is fetching $5.29 this afternoon.

More reading

• Why ASX shares are in awesome shape vs overseas markets
• Revealed: Shares that’ll shoot up with a COVID-19 recovery
• 5 things to watch on the ASX 200 on Monday
• Why Accent, Mesoblast, Redbubble, & Regis Healthcare shares are charging higher
• Landlease (ASX:LLC) share price falls on subdued earnings

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Serko Ltd. The Motley Fool Australia has recommended Accent Group and Serko Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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A second stock market crash could be ahead. Risks such as political uncertainty in Europe and the US, coronavirus and an uncertain economic outlook may mean that investor sentiment weakens to some extent over the coming months.

This may cause paper losses for many investors. However, on a long-term view, it could prove to be a buying opportunity. Cheaper stock prices plus the recovery prospects for equity markets may mean that buying shares in a market downturn could prove to be a profitable move in the coming years.

Recovering from a stock market crash

The 2020 stock market crash was not the first time that indexes such as the FTSE 100 Index (INDEXFTSE: UKX) and S&P 500 Index (INDEXSP: .INX) had experienced a sudden downturn. In fact, their past performances have included many periods of sharp declines that were impossible to accurately predict prior to their occurrence.

Despite their previous declines, both indexes and the global stock market have always recovered to post new record highs in the aftermath of past bear markets. As such, investors who are able to look beyond short-term challenges and falling stock prices can access low valuations ahead of a likely stock market recovery.

How long it takes share prices to recover after a market crash is clearly a known unknown. However, past bear markets have taken from weeks to years to transition into sustained bull markets that produce new record highs. Therefore, taking a long-term view means that there is a higher chance of ultimately benefitting from a likely return to positive economic growth and a rising stock market.

Managing a portfolio in a downturn

Clearly, managing a portfolio during a stock market crash is not an easy task. Investor sentiment can quickly change towards even the most stable of businesses.

However, assessing the financial strength of a company could be a logical starting point. Companies with low debt levels and solid balance sheets may be better placed to overcome challenging operating conditions. In turn, this may increase their chances of benefitting from a long-term stock market recovery.

Similarly, spreading risk across multiple shares and sectors could be a sound move during a market crash. It may lessen an investor’s exposure to specific stocks or industries that may be harder hit by a market decline. This could reduce an investor’s dependency on a small number of businesses and industries for their returns. Over the long run, this may improve their capital return potential.

Reacting to market movements

As mentioned, it is extremely difficult to foresee a market crash. Often, they come unannounced and take place over a relatively short time period. However, investors can control how they react to such events. By viewing them as a long-term buying opportunity, it may be possible to benefit from them through using lower stock prices to build a larger portfolio over the coming years as the stock market recovers.

More reading

• Why BlueScope, Home Consortium, IAG, & Kogan shares are dropping lower
• Village Roadshow (ASX:VRL) share price soars 16% on renewed takeover bid
• Why Ampol, Cann, Fortescue, & Mesoblast shares are surging higher
• Osteopore (ASX:OSX) share price moving higher on distribution deal
• Why the Fortescue (ASX:FMG) share price is shooting up more than 5% today

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is on course to record a solid gain on Monday. In early afternoon trade the benchmark index is up 0.5% to 6,572.1 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

BlueScope Steel Limited (ASX: BSL)

The BlueScope Steel share price is down 2.5% to $16.80. This is despite there being rumours that the steel producer could be a takeover target. There is speculation that private equity firms could be willing to pay as much as $25.00 per share to acquire the company.

Home Consortium Ltd (ASX: HMC)

The Home Consortium share price is sinking 8.5% lower to $3.87. This morning the property company announced that it has entered into a binding contract to acquire Marsden Park Shopping Centre. Home Consortium has agreed to pay $48 million for the Queensland-based convenience focused asset. This represents a cap rate of 6.75%.

Insurance Australia Group Ltd (ASX: IAG)

The IAG share price has sunk 5.5% lower to $5.15 following the completion of its institutional placement. The insurance giant has raised $650 million through the issue of approximately 128.7 million new shares to institutional investors at a 7.5% discount of $5.05 per new share. It will now seek to raise a further $100 million via a share purchase plan. The company launched the equity raising last week in order to strengthen its balance sheet following an $865 million business interruption claims provision.

Kogan.com Ltd (ASX: KGN)

The Kogan share price has dropped 3.5% to $16.88. This may have been driven by a broker note out of UBS this morning. Although the broker has retained its neutral rating, it has reduced its price target from $22.00 to $18.00. While Kogan delivered a strong trading update at its annual general meeting, its growth fell a touch short of the broker’s expectations. UBS also has concerns that recent gross margin strength is unsustainable.  

More reading

• Why the IAG (ASX:IAG) share price is sinking lower today
• ASX 200 up 0.7%; Zip trading update, Ampol buyback, IAG sinks
• BlueScope (ASX:BSL) share price on watch as takeover rumours swirl
• Revealed: Shares that’ll shoot up with a COVID-19 recovery
• Profit up 270% in FY21 YTD, is the Kogan.com share price a buy?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Village Roadshow Ltd (ASX: VRL) share price is soaring today after providing an update on its takeover offer from BGH Capital. At the time of writing, the Village Roadshow share price is almost 16% at $2.84.

What’s in the new offer

Village Roadshow advised it has received an amended cash consideration to acquire control of the company from BGH Capital. The revised offer consists of either of a ‘Structure A Scheme’ of $3.00 per share or ‘Structure B Scheme’ of $2.95 per share.

Following the announcement, Village Roadshow revealed that major shareholder Spheria, will vote in favour of either arrangement. The backflip comes after the latter expressed its intentions to vote against the original format earlier this month. BGH Capital previously offered $2.32 for Structure Scheme A and $2.22 for Structure Scheme B.

Spheria currently holds 6.88% of Village Roadshow shares, with another 0.91% of shares that are represented by the company. In total, 7.8% Village Roadshow shares are expected to approve either scheme.

Board recommendation

Further to the release, the independent directors have unanimously recommended that shareholders vote in favour of each alternative scheme. The directors believe that the BGH transaction is in the best interest of all parties involved. This comes as the company is operating in an uncertain environment marred possible lockdowns should new COVID-19 waves occur.

At the request of the directors, independent expert Grant Samuel & Associates put the new proposed takeover above the value range. The opinion of the latter, estimates Village Roadshow shares to be anywhere between $2.03 and $2.80 per share.

What’s next?

Village Roadshow will engage with ASIC and the court on further steps to be taken as a result of the increased consideration. Details regarding the supplementary disclosure materials are anticipated to be released to the ASX within the coming days. Subject to court approval, Village Roadshow will hold the scheme meeting on 7 December.

Update on debt, cash flow and liquidity

In the period ending 31 October, Village Roadshow generated a positive operating cash flow of approximately $5 million. Considering the government’s JobKeeper program and other benefits, the company recorded a negative cash flow on a post-capital expenditure basis.

Net debt stood at approximately $311 million, comprising of $370 million of gross debt and $59 million cash in hand.

Undrawn debt facilities totalled around $50 million out of total group debt facilities of $420 million.

Village Roadshow predicts operating cash flow between the November and June period to be at a loss of $5 million to $15 million. In addition, the group projects to spend $55 million of capital expenditure prior to the end of the 2020 financial year. Consequently, net debt is projected to be in the range of $370 million to $380 million.

More reading

• Why the Village Roadshow (ASX:VRL) share price is on the rise today

Motley Fool contributor Aaron Teboneras owns shares of Village Roadshow Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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