Bridging debt was temporary and has been repaid using term debt. Term debt of US$1.1bn is what they intend to retain. Vendor finance is US$1.1bn in three tranches of 500,500,100 on the 3 anniversaries of the acquisition. Contingent debt is the additional incentive payments up to US$900m over 3 years if the coal price remains high. While this is technically also vendor finance it's classified as revenue share which and will probably be viewed separately for capital allocation purposes. (ie by it's nature can be funded out of future cash flows).
The capital allocation framework says @Step 3: "Direct cash flows from Queensland operations to retire Vendor finance". We all assumed this meant a few years of operational cash flows however cash from the 30% sell down also fits the definition and will be earmarked to clear this hurdle. The funds probably be kept in the bank account until each of the payments are due but will effectively clear the freeze on shareholder returns.
So once the sell down funds are received in Jan'25 I expect BOD to update the capital allocation framework (@Step3) so that all group cash flows are once again allocated to shareholder returns.
WHC Price at posting:
$6.31 Sentiment: Hold Disclosure: Held
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