It's interesting to consider. Perhaps they will take their time to raise capital. If you consider the first warehouse funding facilities that APT and Z1P had, the rates were not exactly desirable. I'm not sure what rate APT have now but Z1P is around 4.6%. The asset backed lending they were getting originally would have been considered higher risk due to a lot of unknowns like bad debt averages because of their short history.
As we know at the moment, IOU is yet to record any bad debts. It's only a matter of time before they do, however, the longer they go with no bad debts or even extremely low bad debts the better the bargaining position for the rates on a funding warehouse.
An announcement regarding a funding warehouse with rates at 4% would certainly be intriguing. Current margins at 9.6% up from 7.5% which tells us that the company has been able to recycle capital fairly well. Getting an edge on the funding rate would definitely help in terms of profitability.
The company would be required to raise far more capital at a later stage though. A raise would not only be required to cover the $20.7m owing on the IDSB acquisition but also at least T2 expansion.
Big things ahead, a lot to unfold imo.
IOU Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
