RE:JIM, PLEASE TELL US IF THIS IS FEASABLEI apologize, Shamhorish, I misunderstood what you were saying. I thought you were saying you expected $400M profit in 2021, now I realize you expect $400M EBIT.
Having said that, I do have some issues with your projections. First, I do not expect BBD to net $4B from Alstom deal. I believe it will be closer to $3B. As well, the Spirit deal is in question. I expect the deal to be closed, but I expect it will net BBD less than $400M. I think absolute best case, BBD's liquidity will increase by $3.5B
Second, in your calculations, you assume BBD can use the earnings of a year to help pay down debt due that year. For example, you project BA generating $600M in 2023, and you suggest they can use that $600M to help pay the $1.25B due in 2023. The problem is, the 2023 debt is due
Jan 15, 2023, not at the end of the year. The $1.5B debt due in 2025 is due
Mar 15, 2025. Thirdly, by your calculations, BBD will not show a profit until 2023. As long as BBD is not profitable, I do not expect them to get much lower rates when debt is refinanced. Lower rates will come when creditors perceive lower risk, and a company that can't turn a profit is not lower risk.
Fourthly, you assume that BBD can use their cash however they please. This is not true. Just as with CDPQ and the $1.25B that they needed to maintain, there are other covenants and agreements that restrict how much of that cash BBD is free to spend.
Finally, your projections assume the best case scenario. The economy must not falter, demand for private jets must be strong, and BBD (and its suppliers) must execute flawlessly.
Do I think that this is possible? Yes, it is possible. Do I think it is likely? Your guess is as good as mine.
Jim
Shamhorish wrote:
i am SureEric Martel have a better a faster options, but with simple math, we can see that After closing Alstom deal BA can go on till 2024vand beyond
total bbd.b long term dent from bbd 2019 finacial report
Link
2021 1.483 billions + 500 million to new 1 billion facilty
2022 1.700
2023 1.250
2024 1.000
2025 1.500
2026 115 millions
2027 2.000 billions
2028 250 millions
2034 250 millions
Total 9.548 billion at average interest rate of 7- 7.25% = 668.36 approx
+ new 1 billion at 3.66 – 4% = 40 million
Total paid interest on long term debt =669 +40 = 709 million approx
if BA return 400-500 million per year
+
if interest on long term debt is 350 - 400 million, ba can handle it, no ?
in Q2 result bbd expected to have about 1.5 b in cash at end of 2020
so let us use simple math
use proceeds from Alstom deal to pay debt when they expire and to renegotiate new loans with much lower rate when needed ( in 2023 - 2024)
so in 2021 bbd will receive 4.0B from Alstom
in 2021 BA will pay back 2021 debt of 1.483 billions + 500 million to new 1 billion facility, + about 700 million of interest
$ 4.0 - 1.483 - 0.500 - almost $ 0.700 interest = $ 1.317
in 2021 ba will have $ 1.317 + $ 1.5 b from end of 2020 = $ 2.817 b
in 2021 BA returns 500 million
end of 2021 ba will have $ 2.817 end of 2021 + 0.5 ba 2021 = $ 3.317 and debt of 10.548 - 1483 - 500 = $ 8.555
in 2022 bA will pay interest of about 600 million on debt of 8.555 b
assume ba return $0.500 b in 2022
ba must pay debt of 1.7 billion in 2022
end of 2022 BA will have (3.317 from 2021 + 0.500 from BA - 1.7 b debt- 0.6 b interest) =$1.5 b
in 2023 debt will be 8.555 - 1.700 = 6.855 at 7 + % = about 500 million
in 2023 ba must pay 1.25 b,
assume ba return 600 million (now 3 year are under martel) =
in 2023 ba will have 1.5 b from end of 2022 + .600 from ba = 2.1 b
BA can pay back 2023 debt of 1.25 b + 0.500 interest = 1.75 b
end of 2023 BA will have 2.1 b - 1.25 b debt – 0.500 interest= 0.350 b
in 2024 ba will have debt of (6.855 - 1.250 = 5.605) and will pay interest of pay approx $ 0.400
after paying half the debt and showing profit Quarter after quarter for few years
BA can now borrow few billions at 3 – 4 % bring interest payment to 200 million per year and…….