There’s no MC to CAPEX ratio. The problem will arise when they need to raise the equity for the debt component. The typical debt arrangement will require 60:40 or 70:30 debt to equity. So if TMT require best case 30% equity and it all comes from the issuance of shares (presuming for this example there’s no offtakes finance), they’ll be required to issue $114m of new equity which is multiples of their current MC. That’s a big ask. That’d be a 4:1 (roughly) raising. Four shares for every one.
Obviously it’s not that straightforward as there are many avenues to financing CAPEX but it illustrates the problem with having high capex and a low MC.
There’s no MC to CAPEX ratio. The problem will arise when they...
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