RE:RE:RE:How much debt will be left after BT sale?I guesstimate interest on bonds, etc in the 2nd half at $350M+ incl. prefs. That has to be paid out, right?
Jim99999 wrote: Nice analysis, pablo87. Didn't quite follow you at the highlighted text. Could you elaborate your thinking w/r/t interest expense and how it will affect debt in H2? Thanks,
Jim
pablo87 wrote: My best guess:
The Q2 cash position is 2.7B, pro-forma the full $1B loan from Apollo. Pro-forma debt is thus $10.3B.
The BT proceeds will be 5.3B Euro per Alstom CEO. After returning CDPQ $2.1B and the $386M CDPQ invested in Q1, that leaves Bombardier with $3.2B proceeds and $500M in shares (which is as good as cash...). That includes the $414M Bombardier invested in Q2.
They may still have upside on that BT figure, on what basis we don't know, Q3 and Q4 EBIT perhaps? That upside seems more or less shared 50/50 with CDPQ. So perhaps another $100M.
That leaves us with pro-forma net debt of $3.8B. Add Q3/Q4 interest costs to that so $4.2B.
To that you would add in Belfast proceeds, Q3/Q4 BA EBITDA, working capital fluctuations (probably negative due to declining backlog) and the service centre partner buyout (undisclosed). $500M in the positive perhaps?
Leaves us with $3.7B net debt. Does not include working capital surplus or deficit.
As you can see, lots of assumptions and uncertainty.
Originally they had said $2.6B. BT seems to be a wash - they underestimated the legacy costs, there is going to be a revenue and EBIT shortfall for the year as well. On the other hand, the exchange rate has been favorable (1.17 vs 1.10). So it seems the difference is going to be mostly on the BA side - less deliveries so less revenue so less EBIT, and less bookings so drop in backlog and less cash coming in.
A final twist (my own speculation): Bombardier may still have an option on CDPQ's share of BT and thus Alstom - the CFO specifically said during the Q1 conference call that the agreement was still in place. If that is the case, and they exercised that option, the debt would obviously go up by ~$2.2B. Seems crazy but that could be a defensive move IMO. Would not surprise me in the least.
GLTA