Few more details in the Annual Report on the sale. As we already knew the sale consideration was $13m including the assumption of some debt facilities. We know now the cash consideration is $11m (see below) therefore the debt transferring to the buyer is ~$2m.
Of the $11m in cash proceeds, $5m will undoubtedly go towards the repayment of the $15m of convertible notes (as per the Ann in February extending the repayment date). The CNs have a 4.25% coupon so this should result in annual interest savings of a bit over $200k. The Greensill debtor finance facility is quite expensive at 8.28% so I expect they may stop drawing down as heavily on it and use their ~ $8.5m ($2.5m in current cash reserves + $6m residual sale proceeds) for working capital.
All-in-all we are looking at a $13m reduction in net debt from ~$24.5m ($27m debt - $2.5m cash) to a bit over $10m - a significant improvement. Of the residual debt balance, $10m are con notes held by the company’s largest shareholder (Asia Mark Developments) which mature in 12 months - and can either be converted into equity or redeemed for cash. Personally I would like to see them converted as the conversion ratio is only 1.04 shares to notes (currently 37.5m notes reducing to 25m on repayment of the $5m instalment in September) as this would only add 26m shares to the register bringing the total SOI to 112m and reducing debt by $10m. But it’s not up to me!
I also note BUG have received ~$1.25m in US govt loans (Covid related payroll protection) which can be forgiven and they intend to make an application to have these written off. That would also improve the net debt position by that amount, if successful.
(20min delay)