RE:RE:RE:RE:RE:RE:Great Day We have kinda opened a can of worms in my mind on this topic which is great for discussion and information for others.
In reviewing last quarterly financial statements I found 2 interesting details we are currently discussing.
The payout ratio in Q1 was actually 103% (modified to 90% when recalculating for the Dividend Re Investment). So they are already paying out more than is being brought in to us, so the slight bump up in that would not be that aggressive. The question I would have here is they have indicated a payout ratio of 90% for the upcoming quarter, where is that number coming from, the 103% legit payout ratio which would indicate 14.25% growth in receivable from Q1-Q2 (103-90=13+1.25=14.25) or is the 90% a maintainance of the adjusted ratio which would indicate a 1.25% growth as with the dividend increase (5% / 4 quarters = 1.25%/quarter) the adjusted ratio is maintained? Either way we would expect a growth number between 1.25-14.25% which is positive quarter to quarter.
Just to expand on above, they mention Q1 is standardly a lower quarter for income recieveables because AirMiles and Mr. Lube suffer from seasonality issues.
We have started to discuss a hint on possible acquisition and a couple are focusing in on the $46 million of cash indicated to help towards growing into the previous +100% payout ratio. As of Q1 we still had $10 Million cash on hand and in Q1 that number grew .78 mill in what they indicate as a lower quarter, I'd estimate we likely see that we have atleast $11 million cash avalible today. I keep stating that as a cash number because we also have $50 million more of an undrawn 'Acquisition Facility'. I've looked over the terms of this Facility and it was avalible for that time period I indicated before so they actually had $96 million available for growth and as of last quarter we had $60 million.
So the 'Acquisition Facility' interest rate is "subject to prevailing market to interest rates at the time of draw" which would suggest is pretty low at this time. I don't know for sure but that seems like it's Prime+ whatever the major bank is offering at the time and as a business it's likely lower than the Prime+3-7 we see as retail customers on our credit lines. (several years ago I had Prime+1 on my unsecured account which was crazy and I didn't understand how lending worked at the time so I never utilized it advantageously before the bank updated and adjusted my accounts) I notice on the LP specific lines of credit the interests are Prime+.25 or BA+2 and 2.25, I would expect the 'Acquisition Facility' to be similar. (BA seems to mean Bankers Acceptance, which seems like it means some form of Secured Rate, I know Scotiabank's prime rate is 2.45% I would assume other major banks very similar)