debt levels around 50 percent

Might clear up a few misconceptions.... debt levels around 50%...

http://www.businessspectator.com.au/bs.nsf/Article/KGB-INTERROGATION-Phil-Green-CV4VJ?OpenDocument

RG: You talked about your gearing. I think at December 31 the gearing on a look-through basis was about 78 per cent. Would you agree that while nine months ago that wasn’t a problem, in today’s environment that’s just not sustainable.

PG: Well, Robert, look-through gearing on our balance sheet is not really call it a KPI... it’s not a simple analysis because we manage to our corporate gearing, which... at the moment is running at under 50 per cent right. So we’ve actually brought the gearing down, probably happy to keep it at 50 per cent.

Let me explain why. If for example, in our aircraft operating lease business we have a partner, and we’ve had that partner for nearly 20 years, that partner’s contractual agreement in the joint venture is to provide us with 100 per cent limited recourse debt for the aircraft that we buy and warehouse for syndication into the global markets. So we buy the aircraft. They go on [our] balance sheet, but they take 100 per cent of the financial risk. Now that increases our look-through gearing, but we have no risk to that transaction. So the answer is why would we terminate that joint venture to get our look-through gearing down? That deal has worked really well for both parties because they’ve been able to rely on it, and we’ve been able to give them an exclusive flow of opportunity which [has] worked brilliantly for 20 years. And they’re very comfortable and we’re very comfortable.

RG: Why don’t you, when you’re making that sum, say that the look-through gearing, on a recourse basis as distinct from a non-recourse basis, is something less than 78 per cent.

PG: We do. That’s what we mean by our corporate debt.

RG: Yes yes, but the…

PG: All of the debt that is look-through that raises our gearing from 50 to 78 is all non-recourse.