RE:RE:RE:RE:RE:RE:RE:RE:Strange trading last two days!
NonCredibleSrc wrote: Does net debt mean anything without understanding the interest rate that is applied to that debt?
In my opinion, no.
Given today's prime rate, and the fact that CJ has not aquired any net-new debt over that last year or so, the interest rate that their debt is negotiated at is likely far less than the current 9.51% that they are paying shareholders. To my simple way of thinking, that would make share buy-backs the priority as it may better contribute to the bottom line moving forward.
Am I thinking backwards?
Net debt may include bills they have to pay that is not yet due and not accumulating interest to my understanding, it's just what they owe to be paid... if they have Cash on hand the Net Debt could be lower than the Bank Debt, I was scanning through someone's finacials earlier today and that was the case. So you are correct.
Either in the yearly or anouther release a while back they did show the Bank interest on a fixed rate and a floating account's rate... I believe the bank debt rate was in the 6% area and the floating rate was if I remeber correctly was prime +1 or 2 ish, both of which were below the yields of the dividend making the dividend funding work to shareholders advantage... (obviously if the debt rates are higher than the yield rate, the dividend payout hurts shareholders as the money is best served used on the higher rate)
It should also be noted that our bank debt as far as I know has no restrictions to the company, there are a few that were not allowed to give shareholder returns or make other moves that cost the company (outside of maintenance CAPEX) until the bank debt is/was eliminated. Our debt guidances we have seen are all goals set by the board and are not firm.
Also Q, yes the full elimination of the dividend would have meant debt free in about 6 months. I believe that bank debt number is going to get reduced maybe 20+million in the quarterly ending this month with out any tactical maneuvers.
At no point since the dividend was reinstated was it in danger nor has the debt been an issue, everyone just likes to bring them up as issues without diving in.
All the company stances have been well communicated (not all goals have been fully carried out in expected timeframes), if you do not agree with what the company is doing there are several other O&G names doing what you want, invest in them. You don't have to whine that a company isn't hitting your personal expectations, YOU should be investing in a company that you are behind what they are doing and make you satisfied.