Bailment costs have come down by $2.1 million as a result of the last 2 rate cuts. Interest costs have come down by $600,000 during the same period.
I had them making $34 mill EBITDA for 2008/9. I now have them making $37 mill. Since there will be little tax (carrying over losses from 2007/8)and D and A are not cash items, almost all of that EBITDA will go towards repaying debt. (I have actually assumed $6 mill of capex, so about $30 mill rather than $37 mill surplus cash could be used to pay down debt.)
For those interested, they currently carry $45 mill in debt as of June 30, of which $9 mill is HP debt attached to new machines. Assuming an asset sale of $6.8 mill, their non current debt should be around $29.2 mill by Xmas. It is therefore not inconceivable (using $30 mill surplus cash) that they could have totally repaid debt by June 2009.
Interest rate drops are, needless to say, extremely good news for CUS.
CUS Price at posting:
$1.00 Sentiment: Buy Disclosure: Held
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