Yes that corporate facility is a huge drag on the net profit that they can generate as the interest rate cost on that is high and the funds were not used for loans, but rather to support their balance sheet and partly fund the purchase of SocietyOne.
I suspect that if they can renegotiate that (and perhaps that is possible as the company looks less at risk than it was 12 mths ago), it will improve profitability, and/or they could raise money on the market (but with a market cap even at ~10c of 80m that should not be on the cards), but they would need the share price to appreciate to 20-30c before they consider that (IMO). They can do the sums as to how much the higher interest is impeding growth vs a raise vs another party interested in that loan.
Most critical is to maintain their discipline on credit quality ad also growth because not only does it help the share price, but also it helps when they looking to syndicate or refinance any or their loans/facilities......i.e. reduces their costs (which has to happen if they are also moving higher up the food chain in terms of customers as the margin they can demand will have to come down......so that net interest margin is important)
MME Price at posting:
9.6¢ Sentiment: Hold Disclosure: Held
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