The CDI rate was 8% at the time of the ann (June 2013), hence the currently 8% statement in the ann.
CDI is now 11%. I will stick by my guess on the spread (I work in corporate lending). So my guess if we drew down today the interest rate would be 19%, Now that sounds stupidly high but business loans (smaller loans obviously) have had rates as high as 48% in Brazil in the last 3 years. One of the most expensive currencies to borrow in! I can guarantee you that we are not borrowing at around 10% given the ann clearly states we'll be paying a spread over CDI.
Without knowing what regulatory requirements there might have been I would have been inclined to borrow in USD and enter into an FX forward to hedge the future repayments.
Having researched more on this today I can see why the market may not be excited about finance.
If BV don't get anyone willing to buy into the syndicate we're in trouble too. The fact that we know how much they're looking for tells me that BV's risk management have made a clear decision on the max they're willing to lend us.
Yes - BHP's multi billion dollar loan facilities are syndicated but that is no comparison. Legally banks can get a hiding under single large exposure laws if they take on the risk themselves. I worked for a bank that funded a loan to Wesfarmers, subsequently breached single large exposure rules and copped it from APRA.
AVB Price at posting:
8.7¢ Sentiment: Buy Disclosure: Held
