RE:RE:Q3 is outRc0gburn wrote: Capharnaum - I just saw your comments on the debentures - I agree. The 5% of 2022 have also dropped below 60. The 2023 are now 45 . Feels like a good distressed buy.
I have a preference for the Jan 2022 debentures as the only debt item that comes to term before they do is a $10M repayment to Magnetar. (Some Mortgages may need to be renewed as well, but those shouldn't be a problem and have an average maturity over 9 years)
As of the end of Q3, they had $35.5M in bank with an average contribution from operating activities of around $6M per quarter. They will also receive proceeds from dispositions between now and the date of redemption based on the agreement they have with Symphony. Based on their cash position, the cashflow they generate and money from dispositions, they shouldn't have any problems paying the Jan 2022 debentures even if operating conditions remain tough in 2021.
At $60, those Jan 2022 debentures are currently yielding a return of about 72% over the next 13.7 months.
I'm a bit more cautious about the Sept 2023 debentures, since Invesque does have significant debt items coming up before the 2nd debenture series comes up. They have $190.5M in unsecured revolver credit due at the end of Dec 2022 and $85.3M to Mohawk due at the end of June 2023, especially since the return on them is significantly lower than. At $45, they yield about 45% over the term (including interest payments).
So, despite trading at a higher price, imo the Jan 2022 are a much better value as they not only have a superior yield to maturity, but they also carry a lot less risk.
I used to hold Sept 2023 debentures, but I sold them all to buy the Jan 2022 debs instead. I do hold a fairly large number of debentures from that issue. Added another 10k today. I'm not sure who's selling at those prices considering they already had in bank, at the end of Q3, around 75% of cash required for the redemption.