Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Umeed, I think you are in self denial. This company's finances are clearly currently in a precarious state and shops are shutting down all over the place. It is also a lot harder that you intimate to reschedule debt, and the banks drive a hard bargain - just look at DEB for a prime example. This company's debts are now way too high. Even a MTRO style way out is not an option - could INTU afford 9% interest rates?
The problem as ever in this situation is that as the share price continues collapsing the dilution is even worse for current shareholders. Frankly it should have been sorted out over a year ago but management is just not on the case, hence the current nightmare position
Pokerchips: U r right. All £5 billion debt is not due to get rescheduled. Actually, INTU has no meaningful debt to pay in 2020 and less than a billion pounds debt to pay in 2021 ... another billion pounds debt to pay in 2022.
Even if property values has not gone down, it is obvious that INTU would have not paid their debt in 2021 or 2022, rather, as any business, would have got the debt rescheduled (all businesses do that). INTU in-come is enough to pay interest on debt, cover all expenses and still left with around £150 million pounds, so debt or earning to finance debt is not a problem.
Problem is to reduce debt to asset ratio and that can be solved in 2 ways.
1: sell properties and use proceeds to reduce debt.
2: do not pay dividends and use that to reduce debt.
3: Issue preferential shares
But there is problem with raising equity using preferential shares, that is, how much?
Whatever INTU would raise. £1 billion, £ 2 billion or whatever, if prop-erty value keeps going down, this most help. For instance, 30 % reduc-tion in value of retail properties would mean £2 billion reduction in as-sets.
So, only solution is stay calm, market retailing business and increase profit. and use profits to reduce debt. Debt would reduce slowly, but still, that is better than any other solution.
"INTU with £5 billion debt, has to reshedule their debt"
well, in truth...they dont have to reschedule all of it.....they only really need to be looking at debt due 2020-2021.....and for the rest and all, to ensure the interest and yield coupons are met
It isnt as though all £5 billion is up for review, right now
Well it would be pretty irresponsible of the BODS with imminent loan covenant breaches not to tackle the debt issue now . No sign yet of retail investment values stabilising or a halt to retail delinquencies so leaving it any longer would be a high risk strategy
On that note another cut Handmade Burger Co gone They are in Gateshead Intu and perhaps elsewhere
I liken Whittaker's position to Cale Street at Derby
He paid a full price on the 50% but will be paying peanuts for the remainder
"INTU with £5 billion debt, has to reshedule their debt"
well, in truth...they dont have to reschedule all of it.....they only really need to be looking at debt due 2020-2021.....and for the rest and all, to ensure the interest and yield coupons are met
It isnt as though all £5 billion is up for review, right now
I do not think there is any problem with INTU as company. Only problem is perception and future speculation.
INTU with £5 billion debt, has to reshedule their debt. With assets valued over £8.5 billion and income of over £150 million after all costs including interest, I do not think resheduling debt should be problem. It would not be new debt, but it would be debt differed forward.
Only problem is avoiding taxes that could be around £15 million in 2019-2020. For that, INTU need to reduce debt to asset ratio below 50 percent and start paying dividend (as RIET company for which INTU paid ~ £300 million to tax office).
If INTU and shareholders decide that this tax payment is price to reduce debt, than everything would be fine (and that is what INTU should do).