Another poor result, very unfortunate IMO. The Blackrock funding cost was 6% of $15m fee to the broker (?) who organised it on top of the interest of 10% p.a. - I think - may be worth checking with records or the company to be sure - but I think it is well known... Assuming they are happy to pay the broker again 6% to replace the $15m (plus any other money), there is another $900,000 to go out (my guess is before March 31st or June 30th, as discussions are well advanced...). With 9 months to go, they are testing the "can pay bills as and when they are due" ($15m) - so presumably are quite confident fo refinance.... - They may get terms for the likely fee / or broker offers free replacement ?? Unfortunately, hard to see way out of trading to profit other than CR to support losses - but at what discount? with SP at 11c would be hard to put more money in. Perhaps the finance broker could take fee as stock to alleviate this issue? (say) $960,000 at 10cps would be 9.6m shares (the broker would then have 10% of the company...) - so may not be the desired route. I still think interest (at 10% or 16%) on $15m is really a COGS (i.e. before gross margin) not a financing cost - as it is an intrinsic part of the product being sold - but accept that is not the accounting standard - so unlikely to happen - I just don't like EBITDA or EBIT being used as a reference point where so much debt and interest is involved in the business performance. In the old days (pre AASB16 Leases) EBITDA gave a indication for Pre Capex Cash Flow, which is why the market liked and used it - here those measures are not great measures of business performance because there is so much interest involved in generating revenue - JMO I hope LPE can pull a rabbit out of a hat and do well from here - I like the sector - but this one is not for me (I bought/sold at 23c for breakeven, waiting for news/results to get back in - not going to happen yet on this announcement.....) Note EAX averted problems with Banking but Directors put in $1.5m (with $1m to CBA) and terms softened for 12 months before reverting again to current... I like the sector - it should be good - but it is not easy.... no doubt the best businesses have great Management and Boards
LPE Price at posting:
11.0¢ Sentiment: Sell Disclosure: Not Held
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