RE:RE:RE:RE:RE:As we approach February 11thInstead, we have a proud, stubborn and arrogant family running the show.
The family is unwilling to lose control, and they are unwilling to put any more money in. They will attempt to carry on as is until they are absolutely forced to do othewise. However, that time may be imminent.
A lot depends on how receptive the bond market is to sub 5% loans. In my opinion, they need to roll the near term debt over at sub 5%, and take out the 2025's and 27's($3.5B at ~7.7%). If the market is lukewarm to the notion of giving BBD cheap money, their hand may be forced.
The other factor is how is Q1 shaping up? If the backlog is continuing to drop, they will have to adjust production rates. Net debt could be over $5B in a heartbeat.
I think if the bond market is less than entusiastic, and Q1 is weak, the family will have no choice but to bring in outside money. By now they probably have a good read on both those factors. If they are going to do something, I suspect it will happen this month.
Jim
PabloLafortune wrote: 859, these are the reasons: #1, we know how they operated the past 5-7 years with too much debt - both visible and not - and see how that turned out. #2, at 4.7B, that's too much debt for BA considering the other "liabilities" generally - if the company was 100% owned by a very rich rational businessperson, he wouldn't operate the company that way - he would bring the debt down. #3, with that much debt, most of the cashflow goes to interest. Reduce the debt, not only you also reduce interests paid so its a win win. #4, you do the basic spreadsheet math, there is no impact on share price if you reduce the debt and correspondingly increase equity as the EV remains constant. Realistically? The EV should be much higher and its not because the debt is too high. Lower the debt, EV goes up, share price goes up. Plus you can actually generate cashflow So the effect is opposite to what you suggest IMO. The reason the share price went down when they issued shares before is the same as when they issued debt: company clearly had serious negative cashflow issues. YMMV.