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Bullboard - Stock Discussion Forum Sir Royalty Income Fund SIRZF


Primary Symbol: T.SRV.UN

SIR Royalty Income Fund (the Fund) holds investment in SIR Corp (SIR). The Funds' investment, SIR is engaged in the business of owning and operating full-service restaurants in Canada. SIR has concept restaurant brands, including Jack Astor’s Bar and Grill, Scaddabush Italian Kitchen & Bar, and Canyon Creek Chop House, signature restaurant brands, such as Reds Wine Tavern, Reds Midtown Tavern... see more

TSX:SRV.UN - Post Discussion

Sir Royalty Income Fund > Opco Debt Levels
View:
Post by BlueJay2020 on Jul 17, 2021 9:12pm

Opco Debt Levels

Someone posted recently that they were concerned over the high levels of debt that the operating company is carrying.

On May 9, 2021 the bank was owed $24.3M.
On August 31, 2020, the bank was owed $36.7M
On February 9, 2020, the bank was owed $29,3M
On August 25, 2019, the bank was owed $25.2M
On February 10, 2019, the bank was owed $29.0M

Given the trauma that the company has been through over the last 18 months, they do not appear to be in demonstrably woirse shape financially than when the stock was trading at $15.

The debt is a third lower than it was almost 12 months ago, and by the end of the year could be lower still.  As of now they are only using 50% of their availability facilities, which are locked in until July next year.  The finances are sufficiently healthy for the bank to allow a catch-up of circa $5M of deferred royalties and interest.

What am I missing here?
Comment by Wordless1 on Jul 19, 2021 4:01pm
Looks like they issued more debt than they repaid for the 36 weeks ended May 9.... Looks like they owe the bank $24.3M + they owe EDC an additional $6.25M... So total debt is closer to $30M.... Their facility is prime plus 3.25% and the EDC loan is fixed at 4%. Looks like they borrowed the $6.25M from EDC to pay down their more expensive bank debt. ++As at May 9, 2021, the Company has drawn $24 ...more  
Comment by Wordless1 on Jul 19, 2021 4:09pm
My bad there debt appears to be close to $37M. $24.3M + EDC $6.25M + BDC $6.25M = $36.8M They basically took advantage of the government back programs to pay down their bank.  Debt hasn't decrease at all. The Company received the $6,250,000 BDC-Guaranteed Facility under the seventh amendment effective March 31, 2021. SIR and the Lender have also entered into a purchase card agreement ...more  
Comment by BlueJay2020 on Jul 19, 2021 7:10pm
Yep, you're right.  For some reason they decided to bury the new debt in other long-term liabilities, even though they include some of it in the bank credit facilities in the discussion. Still, I'd argue that in a period when revenue was down something like 70 per cent, to be about $7M higher is not the end of the world.  
Comment by Wordless1 on Jul 19, 2021 10:13pm
The fact theat they survivied is good enough.  But we should add all the unpaid royalties and interest to SRV.UN to that debt amount, plus who knows what kind of deferral agreements they signed with landlords where they deferred payment to a later date... Looks like they got a lot of abatements (free rent) which is awesome, but some of it has to be deferred and has to be repaid over time ...more  
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