There has been a slew of small cap news recently with the usual mix of good, bad and ugly.

Firstly, Taste (TAS) has been rising star of the food and restaurant index (J537) of the JSE. The little has seen its share price rise on the back of growing profits, clever acquisitions and increasing market interest in it.

The Group has just capitalised on its share price rerating (TAS currently trades on a PE ratio of 15.8x, up significantly from a year ago when it traded on a PE of 5.9x!) by selling 24 million new shares in itself at 154cps to Brimstone (BRT). This gives Brimstone an eventual 12.4% holding in the Group.

Equity is the most expensive financing method, but when a share's rating has almost tripled I can completely understand if its management don't mind selling a bit of it for top dollar. In fact, if I were management, I would be doing exactly that...

Still, Famous Brands (FBR) is over 14 times bigger than Taste, yet trading at the exactly the same PE ratio. While relative valuations have their risks, I definitely prefer Famous Brands to Taste at this point. Taste's willingness to sell its own equity adds more conviction to this view.

Last week I wrote a rather lengthy article on what I believe are going to be some of the major macro-, market and small cap trends in 2012 (SmallCaps.co.za 2012 Forecasts). It is a little rewarding (or worrying...) when you see your 2012 forecasts popping up literally days or a week or two after you forecast them.

One such forecast was that Spur (SUR) would actually make an acquisition. They did the very next day, read about it here: SUR, COM & FGL.

Another forecast was that 1time (and, indeed, the entire airline industry) will struggle. 1time came out late last week with a trading update indicating that it expects its EPS to be at least (i.e. more than) 20% lower than FY 10. That's quite a worry, as FY 10 EPS were actually a loss of 13.22cps....

FY 11 / 12 will be dark days in the South African airlines industry.

Yet another trend I pointed out for 2012 is that of shareholder-funded company bailouts. In essence, these often take the form of rights issues.

Finbond has just announced an intended rights issue basically increasing its share capital by 50% and raising R20m at 10cps. The micro-loans group (see SUR, COM & FGL) explains that the rights issue will serve to "...meet maturing debt obligations and to grow Finbond's Micro Finance debtors' book."

Bailouts continue as WG Wearne has just kicked out their hired "turnaround team" and reinstated namesake, John Wearne, as the temporary CEO. The IDC has been a key player in trying to turn Wearne around as it extended critical funding and, more than likely, behind the latest adaption of this turnaround.

I do not think this is the end of the woes at Wearne. John Wearne is really just tempting as CEO and the local cement industry's flat line tracks the rest of the construction and property market problems.

Next was a curve ball that I did not see coming: Blackstar (BCK) and Mvela (MVG) team up via a Blackstar offer for Mvela shareholders.

I am not going to go into the details (for some, read here), but just want to note that it makes plenty of sense. Returns to scale for a single, larger and more liquid investment holding company means that its discount to NAV should proportionally shrink, its ability to source and finance deals improve and its portfolio's diversification can be improved.

If I were a Mvela shareholder, I would vote in favour of the transaction and (assuming I did not need the cash), I will also opt for the Blackstar script offer instead of just cash.

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