RE:RE:Lesailesduquebec - Bombardier - sentier- étroitI would prefer them to redeem the 2025 and 2027's. Those two issues total $3.5B and cost $270M interest each year. BBD can not afford to be paying this amount for years to come.
The debt that is due in the near term is less expensive. Of the ~$5.2B that is due before 2024, about $1B is at 8.75%, the rest is at 6.125% or lower.
I am hopeful that they can continue to use the $1B credit facility, and get an additional $2B at somewhere around 5%. With that they could roll over the near term debt and attack the expensive longer term debt with the $3.6B from Alstom. This would leave them with annual interest expense of approx $385M. Don't really expect that is what will happen, though.
Jim
BBDB859 wrote: Thanks for the article momo.
A potion of this article indicates that Bombardier has options in repaying the maturing JBD for 2021/22. IMHO this is the proper way to do it.
Here it is:
"Au total, la pandmie a cout 1,9 G $ Bombardier et cela se reflte dans son niveau d’endettement lev. En 2021, la compagnie devra rembourser 1,9 G $ et 1,4 G $ en 2022. La compagnie aura le choix de rembourser 100 % de ces deux prts ou d’en refinancer une partie si elle le dsire. La dcision dpendra des taux d’intrt qu’elle sera en mesure de ngocier. Mais au bout du compte, sa dette doit obligatoirement baisser.
Faire baisser la dette en 2021 implique que l’avionneur russisse contrler ses cots maintenant. Bombardier voit devoir contrler ses procds d’assemblage comme jamais elle ne l’a fait au paravent. "
This is the way I'm advocating to decrease the Debt. They should pay $1.4B of the $1.9B of 2021. If they can refinance $500M of that at 5.5% then they reduce the total interest of that $1.9B debt to $27.5M. Savings of $120M yearly
The next 2022 is $1.4B. Pay $1B and refinance the $400M at 5.5%. Easily done because now the JB holders have given this 5.5% interest rate in 2021 to Bombardier already. The total interest payment for the $1.4B is reduced to 22M. Savings of $86M yearly.
By doing it this way, the Bomber has cash left over of $900M from those 2 JBD payments they paid off in 2021/2. They've reduce the interest on the debt from $255M yearly for 2021/2 to $50M yearly for 2021/2. Now for sure they have the money $900M, for 2023 maturity of the other JBD, and can reduce that rate to 5.5%.
To me this is the way to go. Because they don't have to cash in the shares from Alstom for 3 years, and they'll have $1.8B of Cash on hand all the time, from now till 2024. Plus you have the option of using some of that Cash on hand for reducing debt if need some extra money that JB holders may want.
This formula only works if the Junk Bond holders are willing to give lower interest rates for the $500M/2021 and $400M/2022. If they don't give you 5.5% interest, then discharge the whole thing, and find some other JB holder that will give you 5.55% now. It can't be that hard to do with interest rates at near 0% now.