OTCPK:MGMXD - Post by User
Post by
BoldForbeson Oct 03, 2016 6:30pm
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Post# 25304365
A Thank You And You Are Welcome?
A Thank You And You Are Welcome?The refinancing of the $72 million of debt was, well interesting to read over the past several days. The 5% and 8.5% interest rates are higher and terms are shorter than I would have liked (just being honest). Glad it is over for now!
A thank you to Mr. Beaty, for once again showing more than enough confidence in Alterra. He purchased stock close to yearly lows awhile back and is now lending at no-recourse (no security) for 5 years. He will only receive an annual interest payment (wow!) until maturity. I am not sure an 8.5% unsecure loan is a great investment on his side, so perhaps it is a sign that if he could he would buy more stock…
If I read the two press releases correctly:
Tranche 1: $36 million from 3rd party for 18 months at 5% coupon
Tranche 2: $36 million from Mr. Beaty for 60 months at 8.5% + potentially 2% closing fee
This not the refinance I was hoping for which was to lock in very low rates for a very long time.
I do believe this is going to be typical for banking going forward: reset interest rates every 5 years as they (the banks) predict higher rates.
Also, banks want to refinance loans due to fees and to reset amortization schedules (meaning you never actually will pay them off).
Is this a case that no one else wanted the loan or a thank you to Mr. Beaty? I would be concerned with the first and can live with the second.
It might have been wise have the loans mature at different times to deal with smaller amounts and different parties. Like a landlord spacing out lease expirations. Of course, a downside is two refinances, two parties to negotiate with…
Any chance we will be cash flow positive to pay off the first $36 million by the first maturity?
Mulling this one over, but I hope the market response well…
I hope questions are directly asked about this (the refinance) on the quarterly conference call.
I want to say "thank you" to Mr. Beaty for lending the funds; at the interest rate I also want to say "you are welcome"…
To Mr. Beaty, 1 of the 2 primarily reasons I am invested in Alterra,
Bold Forbes