To part fund the Dyno deal IPL took a $US1.6 billion facility to provide funds of $A1.7 billion. At that time the exchange $A/$US exchange rate was 0.94 the highest in say 15 years. Needless to say IPL chose not to hedge this exposure and took a HUGE bet on the $A staying strong.
IPL has refinanced and to match the $A1.7 billion position got only $US1.1 billion - that is IPL lost $US500 million or $A800 million since the $A/$US exchange rate is 0.68. To add black humor to this disaster IPL hedged the new $US loan at 0.68 so if [when] the $A recovers IPL gets no benefit.
To twist the knife this financial error of $A800 million has now been covered at $2.50/share in the insto offering by issuing 320 million shares or 25% of the company.
A big price for the shareholders to cover a crazy decision not to hedge the $US loan.
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