The main debt facility is currently in lock-up with a sweep of all free cash flows from the entities that are included under that facility. Hence there is a significant incentive on management to refinance this facility on new and more flexible terms. For the moment they have little flexibility and I would imagine are paying over the odds on the facility margin as well (ie they would still have some punitive prices for their debt).
The other aspect of the debt facility is the hedged interest rates which are significantly above market. At current interest rates, if they could refinance + pay out the mark to market cost for the remaining term of the hedge but then re-hedge for, say 10 years at current interest rates, that would significantly drop their annual interest costs - leaving more cash available for investment in new ventures / debt amortisation / dividends.
With this quarterly, they will be in a strong position to advance that refinancing now and I suspect it is just a matter of time before we see an announcement. I would not be surprised to see this as a topic at the AGM.
DYOR.
IFN Price at posting:
98.8¢ Sentiment: Hold Disclosure: Held
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