GREY:WFREF - Post by User
Post by
wilwalon Jun 02, 2015 1:06am
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Post# 23787487
Analyst post
Analyst post"Bill Andrew's Long Run Exploration Ltd. (LRE) lost five cents to 70 cents on 1.52 million shares, after a semi-annual review of its bank credit facilities led to some amendments. Covenants have been relaxed and the total amount of facilities remains the same at $695-million. The types of facilities have been rejigged, however, so that they now include a $245-million term loan that the company has to pay back by May 29, 2016. That gives it one year to pay back $245-million, compared with its previous plan to pay back $100-million within seven months (by year-end).
Specifically, Long Run had said it would sell $100-million of assets in 2015 and use the proceeds for debt reduction. So far, it has sold only $10-million of assets, so the pressure is still on and, in some ways, has actually increased as a result of the credit review. In addition to the new payback requirement, Long Run's interest rate is now expected to average 6.5 per cent in 2015, compared with the first quarter rate of 4.5 per cent.
Investors seem discouraged. Long Run already trimmed quite a bit of fat in February by suspending its dividend and cutting its budget, so it is counting on asset sales for relief, but today's market is not the friendliest. A speedy sale would be good news. As of March 31, Long Run had $748-million in net debt and its credit facilities were 90 per cent drawn."