The Chairman's Report on Pg 6 of the 2016 Annual Report states "We substantially reduced our debt during the year and now have improved prospects for refinancing of our corporate debt facility. This would reduce our cost of debt and free up cash flow that could be directed towards further growth and distributions in the medium term."
Also, Pg 86 of the 2016 Annual Report shows that their average interest interest rate across all facilities is 6.28%.
There is a Net Debt Leverage Ratio covenant attached to the Global Facility of 6.0 x EBITDA. With FY17 EBITDA projected to be $130m+ and approx $595m of net debt (as of 30 June) then this covenant requirement is safe. However, there is an annoying cash sweep of surplus cash flows to pay down debt. This is why no dividends can be paid until this facility is refinanced.
I expect a refinancing announcement to replace this Global Facility and annoying cash sweep and also to provide funding for the development of future projects, which they have many of. When this happens I expect the share price to be rerated to $1.50 +. But it's good to know that there is no risk of breaching the terms of their current facilities. Any talk of this company being over leveraged are nonsense.
IFN Price at posting:
99.0¢ Sentiment: Buy Disclosure: Held
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