How Can They Pay?
How Can They Pay?
LOAN US$423M Due Dec 31, 2018 ( US$350M at 7.5% interest )
STREAM US$237M Due Dec 31, 2018 ( if bought back )
If PVG manages to accumulate $150M in cash by EOY they
still will fall short in being able to buy back the stream.
So they must get the cash from somewhere.
Given the uncertainty of the operation, whoever may loan
them even $100M is going to want something better than a Flow Dome
fairy tale.
They will want some guarantee and that will cost PVG.
They have an awful interest rate on that $423M too due by EOY.
The Orion and Blackstone loan sharks got their teeth in back in 2015
and now the time to pay up is coming near.
Whatever deal they manage to make, it will be another round of pain
for normal PVG shareholders.
If things had worked out according to the promised plan they
would have been able to easily buy back the stream before end of 2018
and have another $50m left over to go toward the loan ($50m of $350m)
and then more than likely be able to easily refinance that balance at a better rate given the ability to pay out from profits close to $280m by EOY 2018 and that would have made the terms much better.
Now, the opposite is the case.
Not enough to buy back the stream and thus demanding even more to be refinanced and under worse terms.
That loan is due by end of December 2018 and it is a senior secured loan,
which means that PVG must pay it. If they default, the sharks will get paid by selling off the assets.
This puts PVG in a very bad position. They must come up with a huge amount
of money in a very short time. Orion and Blackstone have guarantees, normal
PVG shareholders have none.