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Nonsense. The rate is 10.5%% dropping to 9.75% .And as others have said, the debt load is perfectly manageable at todays avenue levels.
Their cost of debt is 16% that is pretty high
Not saying its going bankrupt but its a heavy level of debt
Could be a distressed asset play if they can survive
Hi Nelson: The bonds can be repaid before they mature in 2026, but at a cost.
So, if PDL finds and sells enough diamonds they can theoretically be debt free by 2024 within current bounds. However, that is of course not the plan nor is it realistic. In fact, the opposite is more likely, that PDL will need to refinance a part of the notes when we get to 2026...
Although zero debt is optimal, my experience is, that some debt as such is not a problem - as long as you have a plan to repay it, and generate enough cash to follow the plan. Therefore, we could easily also see a significant SP improvement in spite of the existing debt.
p.175 of the 2021 annual report reads:
"The Notes are listed on the Irish Stock Exchange and traded on the Global Exchange Market. On or after 9 March 2023, the Company has the right to redeem all or part of the Notes at the following redemption prices (expressed as percentages of the principal amount), plus any unpaid accrued interest:
Redemption price
Period of 12 months from 9 March 2023 104.88%
Period of 12 months from 9 March 2024 102.44%
Period of 12 months from 9 March 2025 100.00%
I believe that in the settlement deal there is an agreement to not pay the restructured bonds early. Hence the dates of repayment will bear no relation to the net cash position.
As Redwineday posts below, the net cash position is positive and with a continuing exceptional stone process likely, should remain so. As such the net cash position will increase - just because you dont pay off the loan, it doesnt reduce the ability of the company to increase the net cash position and also for the enterprise worth to be increased - and along with that the share price.
There will be debtholders owning equity to clear, but with one or two more positive results cycles the demand for shares will arrive and this will occur - I am optimistic that if we can show good margins and good positive cashflow (and assuming the diamond market is static or improves) we will see a re-rating long before 5 years - i expect within 12 months.
GLA
NtD
They had 60m more cash at the end of Q1 than the end of the FY so I think they have the ability to repay more although I do agree. A few more blue or big white stones should see them get close to 50%. At 10% interest rate the sooner they would be mad not to hand as far as I can see in the restructuring docs after the first lien is paid they are free to do this.
Zero upside basically untill these bondholders are gone !!
Who is going to wait 5 years for this to double certainly not me so many things will go wrong with this fukked up world by then .
25th Variant and boosters every 3 months by then Ftse either 9000 or 4000 aswell place your bets ??
I note, based on the latest annual report, that PDL management expect to repay about 25% of the current debt of US$430 million by March 2024, and a part settlement of the rest by 2026. So, I guess net cash position is not likely in the near future... However, the good news is that total current debt is manageable, even under stresstest conditions, and the leverage level is ok again. The rest is up to the business ability to find and sell the diamonds...
Reference:
p.33: "The PDL Group had loans and borrowings (measured under IFRS) at Year end of US$430.3 million (30 June 2020: US$769.0 million), comprised of the:
• US$327.3 million Notes (includes US$11.3 million accrued interest and unamortised transaction costs of US$20.7 million) (30 June 2020: US$676.9 million)
• bank loans and borrowings of US$103.0 million (includes interest of US$0.1 million and unamortised transaction costs of US$1.7 million) (30 June 2020: US$52.1 million). "
p.92 on repaying the notes: "Management forecasts to FY 2026 contained with the viability statement indicate on a base case scenario that there will be a part settlement of the US$336 million loan notes due in 2026".
p.98 on repayment the bank loans and borrowings i.e. the US$103 million:
"The agreed amortisation profile will see the first lien debt repaid in full by March 2024."