The previous loan facility limit of $100m was fully drawn during the March quarter, with D2O arranging an increase in the facility to $112m effective April to be used for working capital and further permanent water acquisitions.
My question is whether the capital structure is sustainable. In a world where the value of assets increase each month, maybe NAB is happy to keep lending. However, I would favour D2O raising some additional capital to provide greater flexibility in these challenging times. Borrowing to repurchase shares and pay dividends hardly seems to be a sustainable model where asset values are coming under pressure in the short term.
D2O Price at posting:
$1.32 Sentiment: Hold Disclosure: Held
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