GREY:WFREF - Post by User
Post by
wilwalon May 25, 2015 5:45pm
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Post# 23762484
Debs
DebsI have completed my positioning on this company. One of the things I found attractive have been the convertible debentures. Anyone looking for a lower risk position on LRE with a high return and marginable, should have a look at the debentures.
Here's the metrics:
Price is about $60, coupon rate is 6.4% with maturity in just over 3 1/2 years.
That works out to a cash yield paid of 10.7% annually and a yield to maturity of about 23% annually. Use a little margin and you can boost your yield even higher.
The downside risk is that management fails to resolve the bank debt overhang and face an extended period of sub $40 oil prices, at which time they could be forced to break up and the debs don't get paid back. However, even at $60 oil, this is a pretty low risk investment and since it sits higher in ranking than common shares, are less risky than the commons.