RE:RE:RE:RE:RE:My take on upcoming Q results Hey Temp.
Some background. Pablo is great with #'s, & Balance Sheet interpretation. He was a regular poster here but now that he got out of the Bomber he visits the Board only quartery. He didn't write enough for me to understand his reasoning on raising Equity, on today's post. I don't even know if the Family can sell anymore of their own shares, or are they going to dillute the Shares Holders with it etc.? But the Billions needed to be raised by selling Equity is going to take some delicate work. But this equity raising idea is not new from him here. I've traded many PM's with him in regards to this Equity raising idea of his. What he was saying before was,
that the Bomber would need cash just to survive, and they had to issue Equity even after the BT sale. What I just said to Club was that I don't mind getting dilluted
if & only if they put all the funds from the Equity raised towards the LTD. But I was taking after the R/S at $15 to $20 dollard per share. I don't know how they'll handle the R/S first, then we can deal with an Equity placement. They don't really need an Equity Placement now, because their Revs & EBITDA's are up to snuff. But the key for me will be the +FCF starting 2023. Once they can get to 2025 I would think their +FCF would be in the range of $800M. With $800M yearly, and a lot can be done with that. New clean sheet programs is another area as you say. But the key is the debt. Let's wait and see if this SP will climb, from now till the proposed R/S. I would love to see it up to $3, or $4 dollars by June 2023 when they increase production to 140 Planes. But iI think we'll see A reverse split before then. I think the Board has something mind. To your other point. At this share Price the demand for those shares would be garbage. Plus the Equity holders would want to see what the Board proposes on the R/S, because they don't want their Investment eroded as well. The other problem they'll have is the market trust issue. Bombardier did an Equity Placement in 2018, and soon after that, the Share price went to $.25 cents from $5.58. The placement wasn't the only reason for that, but it helped the decline. I think that Equity Buyers will not jump into any Bomber Purchase right now.
The trust. just isn't there. FGS, we have a problem getting the current SP above $2 now, to worry about all the other issues of an Equity Placement. Let's not worry about an Equity Raising right now. To replace 8% money with higher coupon is stupid period as u say. I think they're going in the right direction right now by paying off large portions of the LTD, and with higher +FCF's Quarterly/yearly.
Their credit ratings will start heading towards the B's instead of the C's, and their borrowing costs will head lower, and lower as their Profit's/+FCF's increase. Couple that with LTD reduction by partial debt payments every year, and we're aces. The idea of borrowing for less to pay LTD is achievable by exactly what they are doing. Better Ratings, Positive FCF's & Partial LTD payments on existing Junk Bond LTD. Personally I like where we are right now. I don't even want the R/S for at least 2 years until the SP recovers. But there is no OTHER way to reduce LTD without hurting the Shareholders and the Family has no room to dillute themselves further. The other thing as you say is the SP value right now. But IMHO, the main thing here is why try to fix something that isn't broken. We're doing great right now. The first Quarter in Bomber history is always garbage. But the other 3 Quarters are good. Let's see how we survive Q1/2022,, and go from there to the end of 2022. Senior Debt could be good. But the coupon rate there is the other key. Cheers
lb1temporary wrote: Take care.
Replace money that cost 8% by equity costing far more is not a good idea for now.
Don't forget that Bombardier is in recovery; its profit are coming back. At each quarter, its profitability increase. That is more than a 8% annual cost.
That has been said, while we had more stability, after the actual phase of the recovery, when the production will be at 140 planes a year, an equity offering would be welcome. That money would be used for the development of a new model, for reducing the debt, for a better balance sheet, for a better credit rating etc. And as Pablo said, it could be perceived positively by the market, marquing an end point to the Bombardier's come back.
I'm sure that the board has plans for an offering later when the SP will be at 2,50$ or 3$. And it would be welcome.
An offering at 1.30$ would be percieved as a rescue.