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24/09/18
11:50
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Originally posted by Portfolio
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The problem they have is that any financing will be at a high interest rate. If you look at the funding IMF has done through their SPV structure with Fortress the funding cost is too high IMO.
I personally would rather LCA didn't finance aggressively at high cost of debt (IMF) but instead just recycle the balance sheet over the next 5 years and I think it will lead to great shareholder returns. If they could access debt capital for close to 10% I suspect they would take some of that as well (possibly only $20-30m) because the rates of return they can earn on cases far exceeds that. I can't see how they can finance the entire pipeline though.
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Yeah I wouldn't mind them getting a bid of balance sheet debt to leverage the growth a bit.. And just cover the interest payments from their earnings.
I wouldn't want them to finance the entire pipeline.. Being small and selective will be an advantage for LCA.