Equity Raise15 Feb 2024 04:20
As I understand it, the only way for a reit to pay down debt is to either sell assets or sell equity. I now see the only sensible way to deal with the retail bond is a £50m rights issue. Now using some very rounded numbers...
When the share price was 30p, the total equity value was £150m and assuming a reduced annual dividend of 4.8p going forward, the dividend yield was 16%
Now the share price is 20p, the equity value is £100m and the dividend yield is 24%
Assuming a £50m equity raise at 20p share price and the share price remains at 20p, the equity value is £150m and the dividend yield is back to 16% (market seemed happy with this yield two weeks ago!)
£50m cash deals with the retail bond, adds back £2.25m per annum in saved interest and resets the LTV at 48% giving the company some breathing space.
Assuming the market happy to buy new shares at 20p, is this the bottom.........for now?