RE:RE:RE:RE:RE:Alterra Power Arranges Extension to Iceland BondOK, I checked my notes from the shareholder meeting (probably should have done that before positing...) and this is what I heard. Of course management might have tried to communicate something else.
Notes from May's shareholder meeting regarding refinancing the news should not have come at a total surprise:
- John Carson stated the refinance was going smoothly
- The rate might be around 5%, so they did mention this and they did mention that the rates were lower and would probably increase (due to the expecation of interest rates increasing at the April\May time)
- When asked why the interest rates would increase, they (John?) stated something about the Iceland individuals savings and Icelandic rates increasing
- I believe someone asked about trying to refinance in another currency at lower rates and the response was to try to match the operating unit to the debt for the unit (this could be good to take out the foreign currency issues???). There might be some political issues as well. Also, it was mentioned that Icelanders have a hard time moving money out of the country (don't know if that is true) so it should not be an issue to refinance in Iceland due to the amount of availability of funds (so not sure why the interest rate would be high then...)
I guess I had higher expectations; the world seems to have lots of money at low rates. I was hoping to see a low rate locked in for very long term. Instead, I read of a higher rate for the short-term. This translates to the debt continuing to be coded as short-term on the financial statements (affecting ratios, etc.).
The extra year might allow management to take advantage of:
- a "hot" utility sector - most "professionals" thought this sector would be the worst performing for 2016; so far it is the best or one of the best. The better environment for utility companies might allow for management to receive better terms
- lower long-term rate environment - most "professionals" thought rates would be rising by now; nope! Once reality settles in, rates may continue to stabilize or decline.
So RDK, you sir, are correct not to be worried. Either am I.
However, my "expectations" for management would be to get this resolved in a better-than-expected deal before the 12 months are up.
Bold Forbes