Friday, June 22, 2007

Burger Fuel IPO: Dont buy...yet.

The upcoming BurgerFuel Worldwide [BFW.NZ] IPO poses some interesting questions.

They are asking for 15M for a 25% of the company and value the whole shooting match at 60M. That is steep for a company with only 3M sales and a 250,000 loss.

20 outlets makes the unit sales an average of around $150,000 turnover a unit. Not good at all. You should be looking for at least $500,000 a unit for an outlet like that.

The 15M raised is going to be used on expansion and there is of course the possibility that the majority owners will want continuing cash inputs to keep growing.

I think at $1 a share you could pick up this puppy for less than that once we see continued losses mount.

There is alot of competition in this sector, in NZ and abroad, where BF intend to do business.

Having said that, the long-term future of the company could be worth a punt but I have reservations. I like companies to be making profits from day one and for expansion to be funded from profit.

I would avoid at this stage.

I wont be buying at the IPO, perhaps later.

See press release below

Burger Fuel looks for extra capital filling
NBR staff

Josef Roberts & Chris Mason

Fast-food franchise BurgerFuel is set to list on the NZAX and is looking to raise $15 million in capital.

The company is issuing 15 million shares at $1 each, with the option of purchasing additional shares at the same price in 18-months time.

The issue values the whole company at $60 million with public shareholders owning 26.7 per cent.

The remaining shares will held by staff, associate directors and the promoters of the offer, as well as the founder and managing director of the company Chris Mason and Executive Director, Josef Roberts.

Both Chris Mason and Josef Roberts have entered into stand-still agreements running for 12 months in respect of their shares.

The funds will be used to fund expansion into Australia, Europe and the US. At present, BurgerFuel has 19 outlets in New Zealand, and one in Sydney.

Prospectuses can be viewed at

The company says it is taking an innovative and irreverent approach to capital raising, including a provision for 70,000 of its "VIB members" ("Very Important Burger Connoisseurs") to get the first chance to purchase shares.

Burger Fuel Worldwide @ Share Investor

Burgerfuel: Dubai Marketing Hype!!!
Burger Fuel 2010 Full Year Profit Analysis
Burger Fuel 2010 Full Year Profit Preview
Burger Fuel Worldwide: 2009 Half Year profit analysis
Stock of the Week: Burger Fuel Worldwide
Download full company analysis from Thomson First-Call
Burger Fuel doesn't rule out capital raising
Burger Fuel Worldwide: Closer look at Company Accounts

Analysis - Burger Fuel Worldwide: FY profit to 31/03/09
Burger Fuel: Running on Empty
Burger Fuel leaves investors hungryBurger Fuel management cagey over company progress

Burger Fuel cooks up Dubai deal
NZX share trades with strings attached
Don't buy Burger Fuel, yet
Burger Fuel: Inside info?
Burger Fool IPO: Burger Fool?
Exclusive Interview with Burger Fuel's Josef Roberts
Burger Fuel's Daytime drama
Burger Fuel share price out of gas
Beefing up store numbers
Director explains share price drop
Burger Fuel slims down in value
Burger Fuel and Coke
Marketing Burger Fuel's future
Pumpkin Patch VS Burger Fuel
Burger Fuel results and commentary

Discuss BFW @ Share Investor Forum - Register free

c Share Investor 2007