a little gem starting to sparkle, page-6

Think Opaline hit the mark with his comment on 27 Feb - refinancing issues. The capital raising announced today is at $1.30 - a big discount to the previously traded price - yet it will only reduce gearing from 67% to 63%. On the face of things these seem like good assets with a nice yield, but that sort of gearing level is still too high in today's very tight credit market. To reduce gearing further over the coming year the company would need to reduce dividends (ie direct the cashflow to debt reduction) or issue more shares to raise more equity, or sell assets (and it would be very hard to get a decent price in today's market). I think the gearing is the issue to focus on.
The other thing that frustrates me about these highly geared companies is the way they talk about being 90% (in DUE's case) hedged for interest rate risk like its a good thing. Its not - interest rates are at all time lows and going lower - having interest rates fixed at much higher levels is something to apologise about, not boast about.