No free cash flow in the 1H11. They couldn't pay any debt principal. Maintenance costs rising, so unlikely to see cash flow improve much from here. Means management's guidance for a $100m reduction in debt principal is "wishful". Risk is they start falling behind on interest payments. Not a covenant breach, but would see debt rise further and increase the likelihood of a covenant breach in 2016 (when the covenants tighten).
So they really only have 1 option: a) sell German assets - done - repay some debt b) sell US assets - trying to do - repay some more debt c) conduct a highly dilutive capital raising to lower the gearing, and simultaneously refinance the debt facility
So who wants to own the equity in front of that capital raising?
Management should have done it ages ago. Now the price is falling and the dilution from that capital raising will keep increasing.
Good luck to any holders. You may get out of jail if the US assets are sold (at a good enough price to repay some debt) and then management can find a trade buyer for the Aussie portfolio (at a price in excess of the remaining debt). Unfortunately the Aussie portfolio is 40% merchant (no off-take) and unable to sell RECs without crashing the REC market (remember the $8m in REC "revenue" booked for RECs produced but not sold. ie management weere hoping to REC market improves. It hasnt.)
IFN Price at posting:
30.0¢ Sentiment: Sell Disclosure: Not Held
