RE:RE:RE:New Approach on LTD. TL;DR: A lot of boring numbers about debt repayment and such.
Hey BBDB859, here is how I have tracked the cash on hand as debt repayments occured. Since we agree on the remaining debt, I have not shown a breakdown of the distribution of the tender offers payments, only the totals.
We know BBD had $1.8B cash on hand. They received $2.920B cash plus Alstom shares from sale of BT, for a total $4.720B (we will deal with the Alstom shares later). They raised $1.460B ($1.200B + $0.260B) for a total of $6.180B cash.
From this they paid out $0.750B HPS LOC, so $5.430B remaining. In Q1, they had FCF usage of $405M, so cash now down to $5.025B.
The Aprl tender offer cost $1.575B to pay down $1.501B of LTD, so remaining cash down to $3.450B.
In May, they sold the Alstom shares for 506M Euro. They redeemed 414M worth of May 2021 Euro bonds at a total cost of 426M Euro. This amount includes an undisclosed amount of accrued interest, so I will speculate the cost of redemption to be 416M Euro. This leaves 90M Euro from the Alstom shares, or about $108M. We can add this into cash on hand, so total now $3.558B.
In June, the second tender offer cost $824M to reduce LTD by $790M. Cash on hand now $2.734B.
Redemption of remainder of Dec 2021 bonds cost $63M to reduce LTD by $61M. Remaining cash $2.671B
Redemption of Mar 2022 bonds cost $95M to reduce LTD by $92M. Cash now $2.576B.
Partial redemption of Oct 2022 bonds cost $475M to reduce LTD by $475M. This brings cash on hand to $2.101B.
Now I could be wrong to include the ~$125M worth of fees they've paid in this the way I have. It might be better to say they have ~$2.226B left after debt repayment and let those fees show up in the FCF usage number, similar to the way that the $76M loss on closing the HPS LOC showed up as part of the $405M cash burn in Q1. However, from the point of view of how much cash is still available for debt repayment, that ~$125M is gone.
In answer to your question about how much cash they will need to keep on hand in the future, I would only be guessing. However, as FCF increases over the next few years, there is no need to keep the $1.5B they say they need now. I can see that number being halved, or even smaller, freeing up an additional $750M -$1B, especially if they can obtain a LOC at a favourable rate. Some of that freed up money could go to debt, but some will have to go to capex, as they will have been lean on capex for several years at that point.
Jim
BBDB859 wrote: Ok.
So we're good up to here, but from what you're saying is, they'll get rid of # 7 soon. which makes sense, it's nearly due.
So. We have $7.469B - $.091B = $7.37B LTD.
I agree here, that they will get rid of #7 of $.091B soon because it's due in March/2022. Ok but the #3 of $.119B can't be discharged I just noticed because it's FIXED and due in 2026. Plus it's in Canadian dollars of $.119 CAD taken out in Dec/1996. I don't know what that is. I put #7 in as US dollars as well, so I gotta correct it.
So here, $7.37B -$.119B = $7.25B + $.093 (today's CAD/US exchange) = $7.34B LTD. This is what we had basically, right?
OK. $7.34B LTD done
So doing it another way to verify the LTD. They owed $9.336B without the credit facility - $2B (from the BT money) = $7.336B. So 40M less. But if you add the capital leasses $19M and some $6M or so in other things then we're their for both scenarios.
Ok. Let's take a stab at what they should have on hand right now.
BT money $3.6B
-They spent $2B on the LTD.
-They spent $750M for clearing the credit facility.
-They had a cashburn of $400M the last quarter Q1/21.
= $2B + $1.15 = $3.15B spent.
So $3.6B - $3.15B = $450M left on hand
So $1.8B in reserves + $.450B = $2.250B
So they also should have another $260Mill from that extra issue
So again $2.25B + $.260B = $2.51B on hand - the $91M (#6) that they'll discharge next week as say and we should have $2.41B Approx.
So that's what should be on hand in Q2/2021. But we both know that they'll have another $100M to $200M cashburn in Q2/21. So that'll leave us with $2.2B to $2.3B on hand
That only leaves a few variables here. One the Alstom $400M and the LOC/CF.
This brings us to the credit facility. So my question to you Jim then is this. To the best of your knowledge (and you've had this discussion with Pablo already). What will the cash on hand have to be yearly, on top of the Credit Facility. Is it $1.5B still in your estimation? Because $1.5 sounds unnecessary to me. I think that, depending on the size of the LOC, they maybe able to free up a lot of that $2.2B left over in Q2/22.
I don't know about how you feel from the above question? But here's my take on it. I think they'll take out an LOC/CF of $1.5B after they pay the $1.014B for #6 & #7. In fact they will take out #6 and #7 mid next year, not 1 minute earlier, because they won't want to pay interest on the LOC, till closer to due time of Oct./2022 for #6 and #7. All this makes sense to me because then, by mid 2022 they can free up the balance of $2.2B -$1.014B (when #6 & #7 is paid) = $1.1B left over in summer 2022. The $1.1B will be plenty going forward to help tackle the $2.5 due which will be coming in 2024. JMHO, hope it's not too hard to follow?