So if company A has NPAT of $10m, and then borrows $200m @ 10%, for an interest charge of $20m PA, then there is no impact of profits? I can accept that it depends on how that $200 is spent, and it is possible to make extra profit to cover the interest, or to substantially increase the asset base.
To assert that there is no impact on profit, I find rather interesting.
Of course in the case of LYC, all bets are off, as they just keeping rolling up the interest as well - just kicking the can down the road. But to be fair they are in a corner with few options so SH are lucky that the senior management are able to continue to negotiate with the lenders and bond holders. Each time the can is kicked it just extends out the time when LYC can be profitable, IMO.
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So if company A has NPAT of $10m, and then borrows $200m @ 10%,...
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