Lynas-Japan...potentially a new stock issue, page-29

 “ Repayments will be met IMO”  Opinions are easy facts are a little harsher.    They paid AUD 27M in H2  2018.  Since then all REO prices have dropped, Next has increased quality and quantity so net impact is still unclear.   Lynas  generated less cash in Q1 than Q4 ’18 adjusting for JARE payment.    Unless you qualify with REO prices rising how are they going to do it?      They owe USD 165 M to JARE and MT K combined See section 8 Q1 cash flow report.      Between now and June 2020  about 10M in interest will accrue.   There are four Halves between now and when it is all due   H1 2019, H2, 2019, H1 2020, H2 2020.    (165M + 10M) / 4 =  USD 43M owed per half.     This is possible but unlikely without better REO prices.  Q1  cash increase was AUD 23M=  USD 16M,  REO prices have dropped.     So how do they make it?      I don’t think paying it all off is all that wise JARE will refinance at reasonable terms especially if combined debt is below USD 100M, I expect it will be close to 50M ~ 75M.   Personally I think investing in Lynas with a NEXT 2  program is wiser than  putting every last penny in to loan repayment.      I am sure they will tell us their plans in the GM.    Private financing will also be an option.   10 year bonds totaling USD 100 M  at 6% will be real easy for Lynas to make payments on.   Depending on REO prices the bounds  might be BBB or A rated.   Current AAA rated interest rate is just below 4%   I think JARE will give a better rate than open market.   Some debt is desirable especially when you are growing and have a good return on investment.  As long as they Pay USD 10M ~ 20M,   each half, which should be easy,  they will do just fine.     My guess is they might even pay  USD 25 ~ 30 M this half.   But then  (165 M + 10 – 25) /3 =  USD 50M.  With so few halves left any  shortage  now adds to the following Qs significantly.   The real problems are SHORT TERM REO demand anda shaky WW economy which are much harder to quantify.