Quote; THE TRANSACTION ALLOWS SIGMA TO SIGNIFICANTLY REDUCE ITS OUTSTANDING BANK DEBT Sigma is currently required to repay its $340 million syndicated banking facility according to the following timetable: ■■ $30 million upon Completion of the Transaction; ■■ $10 million by 31 March 2011; and ■■ $300 million by 18 September 2011. Sigma also has trade receivables securitisation facilities totalling $750 million, $100 million of which expires in February 2011, and $650 million of which expires in March 2011, subject to certain conditions. Sigma is currently in discussions with its lenders regarding the extension of these facilities. If the Transaction proceeds, Sigma intends to fully repay the debt outstanding under its syndicated banking facility, and to repay a significant proportion of its trade receivables securitisation facilities. Subsequent to full repayment of the existing syndicated facility, Sigma intends to establish new debt facilities. These new facilities are currently intended to be drawn in the order of $150 million to $200 million after the Transaction.
From the market update 28/2/11 Quote: Sigma received sale proceeds of approximately $900 million for the sale of its Pharmaceuticals Division to Aspen. These proceeds were used to retire the Company's syndicated debt facility of $325 million. In addition, the ANZ off balance sheet debtors securitisation facility of $358 million was fully repaid in early February. This facility has now been cancelled. An amount of on balance sheet securitisation debt of $62 million remained in place at 31 January 2011. The Company?s net cash position after all debt repayments in early February 2011 was approximately $210 million The Company is negotiating a new debtors securitisation debt facility of $200 million with a term of three years. Credit sign-off, subject to final documentation, has been received, with finalisation expected before the end of March
The total off balance sheet debt was $750m, and only the ANZ facility was expired. The remainder on balance sheet debt remaining seems to be the $62m. There seems to be no mention of the remaining off balance sheet debt. Very tricky accounting the off balance sheet debts/exposure.
This would leave approx $392m of off balance sheet debt floating in accounting land (original $750m - $358 (ANZ paid out.
The problem with public co's is that the accounting standards are different to what we associate with standard accounting practice.
As mentioned, the untold story (post sale) of the total off balance sheet debt is the only concern i have. (They have only accounted for the ANZ portion.) Otherwise, the cashflows generated from normal activities, combining the added product range from Aspen, the reduced interest expense, the change in accounts receivables, and the focus of management should provide a steam engine in the near future.
SIP Price at posting:
42.0¢ Sentiment: Buy Disclosure: Held