guys, hate to burst your bubble, but these are the facts1. it's...

guys, hate to burst your bubble, but these are the facts

1. it's going to take 6-9 months of hard negotiations to refinance bly debt. and that's IF they are able to refinance at all. what a complete disgrace it is that it should take 6-9 MONTHS to refinance a paltry $600m of debt. this is an indictment on the banks, not bly. before the credit crisis, it probably would have taken 6-9 hours to get approval.

2. let the games begin. brinkmanship will be high on the agenda of the foreign banks that want to get out of the aussie market. i guess the one thing going for bly is its strong american and global presence despite ASX listing. how many banks are in the syndicate? 20 or so? stupid move imo, dealing with that many banks, some of who will have no intention of refinancing is going to make things extremely difficult.

3. so let's say bly is able to refinance, good, but what will the conditions be? imo extremely onerous. it is clear the margin is going up. it is currently 50bp over libor, i'd be looking at no less than 400bp in this market. that's an extra $40m of interest per year on $1bn of debt. does bly have the ebitda to service it?

more importantly though, what if the banks impose the condition that bly has to repay its debt before dividends can resume? now that would throw a spanner in the works. imo something like this is likely. the interest margin will go up, and the conditions will be alot tighter. there may be no dividends for another 2-3 years.

4. i have heard some people say bly is the biggest and best mining services company. remember bly was only able to make USD 150m profit at the absolute top of the mining boom. and all it takes is one bad year like this one and the company will struggle to break even, and probably make a loss. imo she seriously needs to cut her cost base and review the way she does business if she's going to surve the post GFC world.




biggest and best mining services company