The Bear Room, page-2254

Still expect to see a CR very soon and thought it could be this week, but could just as well coincide with the 4th qtr 4C / promo brochure (a.k.a. report lol). Cash earnings have improved to reduce burn over the past year but any surplus is mild and very tenuous IMO. No interest rate reductions for some time and they will be slow and mild. However, they have been merrily refinancing the underlying loan book at favourable rates, notably the Senior Notes are rated AAA (tutor will say 'I told you so' lol) and in March rolled until Oct 25 at a variable rate plus Avge Weighted Margin of 2.67%.IMO that means they have managed to convince the market that ZIP is a serious business which will not be going broke. That is the great part, but Weighted Avge Cost of Capital is reported to be 15.9% at 4 July and Return on Capital in 2024 is negative 13.7%. It is what it is, but with the debt to equity ratio in the high 1600s it is only a matter of time before equity is wiped again. I would expect them to raise equity while they can - SP up, hopefully positive 4th qtrly, prior to FY24, prior to guaranteed political turmoil in the US which will upend markets, while the markets are in a good mood before they catch fire, while there are no floats (and that mad Gomez y Gusman thing shows how much you can grab money from crazies when they are desperate to park it).There's heaps more reasons, but I'll take a punt on $350 - 400 mil at a discount which may add 300- 400 mil SOI which would not be a big drama. These guys are proven performers when it comes to selling the dream to retail and they have a much better chance of an institutional offering now, given the sheer bulk of the business. I would expect them to eat a s#@t sandwich, bury that 'overdraft', deploy working capital to business development and marketing, perhaps even margin to the lending book. IMO if it happens the gun will be fired either this week or more likely coinciding with the release of the 4th qtly in 2 weeks.