The Blue Sky Alternative Investments Ltd (ASX: BLA) share price is down 94% over the past year and could have further to fall given it warned it could breach the "covenants" under its convertible note facility with U.S. distressed securities investor Oaktree Capital.
It was only back in March 2018 that the company raised $100 million in capital from institutional and retail investors at $11.50 per share, with the scrip now changing hands for just 49 cents. Ouch.
In other words $100 million in investors' funds has been almost completely blown up in less than a year, as the company collapsed amid some shocking allegations as to its real operating model and accounting practices.
For the six months ending December 31 2018 Blue Sky reported a net loss of $25.7 million and a "net cash position" of $54.8 million that includes a drawdown of the net $47.7 million convertible note facility from Oaktree.
In other words it looks like it's now totally reliant on Oaktree's distressed asset funding (likely on punishing terms) to continue as a going concern.
The management team has been completely overhauled in a bid to restore wider market confidence in the business, but unfortunately Blue Sky's credibility as an asset manager is shredded in the eyes of serious investors.
As such, even Oaktree will have a tough time restoring market confidence in the business and turning a profit on its investment.
Needless to say Blue Sky is not a business I'd suggest taking a punt on!
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