RE:RE:RE:RE:This deal…..the 6% interest rate is due to the fact that the financing is unsecured & subordinated and is in fact similar to capital (one could even argue if this financing would increase the net debt position of QTRH). Thus I do not get why people are referring to 2% or 3% as a realistic rate for this type of financing, since this 3% is a rate for senior debt. I agree with V_G that you have to offset the 6% rate against the return expected from equity, which is typically around 13-15%.
An important question to ask is why they launched the shelf prospectus rather than securing a senior debt facility to finance acquisitions... assuming 2.5x net debt/EBITDA ratio is deemed "reasonable" they could have added more senior debt but opted for subordinated debt. But securing senoir debt is time consuming whereas the shelf prospectus grants the flexibility to easily and quickly raise debt and/or cappital. This indicates a large deal is in the making and could happen rather sooner than later.
Another important point is to look at what has happened the past weeks. QTRH is a totally new company with the ETC acquisition. QTRH has a market cap of CAD 380 and they launched a shelf prospectus to raise CAD 200mio debt and/or equity... well, I guess you have a bigger plan. Another acquisition within the next weeks implies that QTRH pro forma FY22 recurring revenue will easily amount to CAD 300mio. Not sure if everyone grasps the magnitude of this aspect.