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Positive news on a debt facility today. My view was that this should be a key focus of the management team and it clearly was. LEnders will (almost certainly) have been provided with detailed technical reports as part of this process. ALthough there are conditions precedent to be satisfied before the facility becomes legally available, I suspect these are not hugely challenging. This is a major positive step forward in my view. DYOR
Agreed but will have to wait for any positive reaction from the market. Always seems to take time for a positive sp to develop.
Here's hoping
IMO from the limited detail this is an excellent agreement.
Operations continue profitably and a RCF allows the company to plan and manage the move, without unreasonable costs for unutilised funds.it is a good solution and as I’ve been hard on the BOD I have to give credit to them on this one.
The
And at the current price it yields over 10%
This new $200m RCF at 10% interest just shows how crass the $30 million shares buy backs at £4.00 ISH when share price is now less than £3 and falling further ..
Had they not done the share buy back they would have been saving $3 million per year in interest payments at a time when they needed that $30 million funds they used up , to grow the business
Gross stupidity from a naive ( kind description )CFO who appears out of touch with optimal funding arrangements for a growth company
Candid
How did you get these figures
You say 10% interest
rns says4.85%
You say share it back costs 30 Million
Rns says cost 23.6 million
You say buyback cost because of board action
3 million a year
1.15million a year.Less than half you quoting
How did you come up with your figures ami missing something
Correction
Should have read
Candid quotes 3 million a year interest
But according to Rns only 1.15 million a year
( 23.6x4.85%interest =1.15 million) not 3 million why the big difference
They are not a growth company - they are a cash generating machine. The share buy backs were likely a strategy enforced by major shareholders which made sense to them at the time.
Correct, share buy back part of long term plan to return capital to shareholders. This is not news.
The new debt is 4.85% above SOFR closer to 10% but not 10% either I don’t believe.
£3m per year to grow what??? Cash available but not growth opportunities. Any growth would be WCP D Willis would be hundreds of millions not 3
The debt facility funds the move using RCF so reduced interest versus a standard debt facility where you pay interest on 100% of available facility there a reasonable move.
Thanks all for your responses ...in no particular order
1. Interest rate on loan is SOFA ( currently 5.31% plus 4.85% = 10.16%
2. I thought I read that there were ,$30 million of share buy backs planned so that is where the $3 million per year came from
Not a growth company ? Check out financial analysis on HL Website
Revenue has increased year by year , doubling from $262 million in 2018 to $525 million in 2023..
Over this period profits have increased from $50 million to $206 million
Net assets have increased from $890 million to $1.1 billion
The borrowings are to fund new Capex to secure production for next 50 years ...not to pay operating costs
Share buy backs are rarely an efficient use of funds
There are occasions where it is . Where a company or investment trust is winding down it's operations ..
None of these scenarios apply to Kenmare ...just ask yourself ..on the one hand buy back shares costing I think $30 million on the other hand , set up an RCF for $200 million at 10 % interest ....how can that be a sensible transaction ?
Sounds to me like the left hand doesn't know what the right hand is doing
There must be a hidden reason why this share is so cheap ..a reason that isn't implied by the information held in the public domain .. a company with a market cap of just £263 million pound , with £900 million of assets , trading at a PE ratio of 1.75
Markets rarely get it this wrong , so what is going on
There must be a hidden elephant in the room somewhere ..thus far I have only uncovered an idiot in the board room buying back shares on borrowed money earmarked for future capital spending
On the investment from SGRF, they plus a number of other supporters stated that they wanted capital returns within 5 years. The board and shareholders (that remember) were aware of this.
I wish I sold my, but didn’t, so it’s my fault.
Why is the share price low:
Chinese economy and real estate decline.
Lower GDP growth
Funds getting smaller and need to sell
Illiquid market to sell into, coupled with point immediately above.
If you stay around long enough you will see it rise prior to the dividend announcement, as it always does.
Enough for tonight 🥃
Make sense apart from: Funds getting smaller and need to sell
what funds?
Some of the long term holders are funds that investors can extract their investment. As investors take funds out the fund has to reduction holdings across their portfolio. As interest rates rise sone investors are taking investments out of these growth funds to invest in bonds etc.
As a result some KMR share holders have to make small reductions in their KMR shareholding.
The impact of this in an illiquid market is a depressed share price.
My opinion is the board need to do bring to bring in new investors to stabilise the share price, such as the capital markets day and investor tour but they need to be more active in public.
Which funds hold Kenmare to any significance though?
Fund managers of open ended funds hold many shares and choose which of them to sell, they don't have to sell KMR, and why would they?
Individual shareholders are of course a difference kettle of fish.