debt and interest rate, page-14

I think people are too fixated about the company’s ability to refinance its debt and are worried that it will become like CNP. There are clear differences between the 2 companies.

1st BLY unlike CNP is not an asset holding company, when the time comes to refinance its bankers will take into consideration it’s earning capacity rather that the assets on its balance sheet. Its earnings will drop this year but I believe will still hold up quite firmly given its customers are either gold mining firms or world class mining companies such as Rio and BHP just to name a few.

2nd BLY has already indicated that it will take steps to lower its debt levels in its AGM, which will go well with its bankers and show them that they are able to manage their debt levels. Compared to CNP whom I believe are having trouble with managing their debt.

3rd Yes, BLY’s debt to equity ratio is very high but if we look at its profit to debt levels one will find it’s rather is not as disturbing. Even if its profits next year are 25%-30% lower than this year the company will have little trouble servicing it’s debt. But I believe the directors will go further to reducing its debt levels.