A bit more detail around this new debt facility would be nice. But since it will be used to repay the existing OCP Asia facilities in full, we can expect that AT negotiated superior conditions with the BNP Paribas loan facility.
Here are the key points of the OCP Asia debt facility from the 17/11/2015 announcement:
Highlights
Final stage of balance sheet restructuring now complete
Galaxy residual debt profile now termed out to 3 years
New secured debt facility for A$31 million
Proceeds to repay Galaxy’s outstanding convertible bonds
Galaxy Resources Ltd (ASX: GXY) (“Galaxy”) (“the Company”) is pleased to announce that it has executed a term sheet with OCP Asia (“OCP”) for OCP to provide a A$31 million secured debt facility to the Company, for the principal purpose of repaying the balance of outstanding convertible bonds.
The term of the OCP facility is for 3 years, secured against the assets and undertakings of the Company and will carry a coupon of 10% per annum. In addition, OCP will receive a one-time facility fee equivalent to 8% of the loan and 10 million warrants with an exercise price referenced to the share price in 6 months (subject to a floor of 8 cents), which shall be exercisable until the maturity date of the facility. The 8% fee is payable in Galaxy ordinary shares priced at a historical 20-day VWAP up to the date of first drawdown. The term sheet provides that upon full repayment of the facility, the Company will provide to OCP an agreed hurdle rate of return which is inclusive of the interest paid, as well as any gain in value of the Galaxy shares issued in satisfaction of the facility fee. Other terms include those customary to this type of financing.
Well, this OCP facility to me sounds like a pretty crappy deal in the first place: on-time facility fee of $2.48 Mil equivalent in GXY shares (32,232,909 shares @7.7 cents plus 10Mil warrants @39 cents (share price 16/05/16) and 3.1Mil interest/annum!!!
31Mil (loan) => $21Mil (shares)+$2.6Mil (warrants)+$3.35Mil (interest) = ~$27Mil in profit for this loan!!!! Incredible! Good thing to know that this is now in the past. Forwards and upwards!!
Of today's announcement, I particularly like this: We are extremely pleased to have executed this facility, on very competitive terms with BNP Paribas, which provides for improved financing costs to the Company and we look forward to working closely with them in the years ahead”
GXY Price at posting:
63.8¢ Sentiment: Buy Disclosure: Held