RE:Thoughts on the bought deal??I'm not following too in depth as I have no position in CHR and don't plan on starting one so I may be wrong about some of this stuff, but I think you can use my ideas and views on the subject.
General thoughts on the subject, providing they can get enough demand for it for these 5.75% debentures:
Pros:
- refinances debt at lower rate saving a bit of money possibly offset by fees for the issuance of the debentures + early redemption of 6% debentures
- frees up the Dash 8-300s for sale/scrap sale for parts
- Dash 8-300s if they are being sold will stop sucking cash through storage costs
cons:
- previously advised estimates for the values of the 19 dash 8-300 are probably invalid, they probably were based on ability to lease the dash 8-300s. They probably are not able to lease the planes thus have come up with this plan to monetize the assets through direct sales or parts sales (makes sense since supply chains are messed up due to covid 19 pandemic) I don't know if they used their estimates on the values of the dash 8 -300's in their balance sheets but if so, this means more writedowns which i think are reflected as one time items on income sheet, but i may be wrong, my accounting knowledge isn't that good.
- This is a statement as to how little profitability chorus is expecting, if they were expecting to be profitable, they wouldn't have to raise additional 85million in capital at 5.75%. Remember 2019 Chorus aviation net income was 133million so 85 million should be peanuts to them if they are really on the path to recovery in terms of net income.