RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Here it goesbandit69 wrote:
Just out of curiosity, what happens when CB's start to raise rates and do it the expected 4 to 5 times this year alone? Markets say there is about a 75% probability Canada will move next week. What will happen to debt laden companies that have floating interest debt? or is it already happening? Oh, right, the interest is dropped out because of EBITDA even though I saw interest paid at what appears will be $12MM annualized and that's before any rate increases. oopps.Sorry, forgot, interest is also a fictional cost.
I never said interest costs were fictional - I gave my case as to why WELL's amortization was truly a non-cash expense and you seem to have ignored it. it was $16MM last
quarter, that's a big number...
interest is referenced in EBITDA because i) it can be re-financed and ii) in an acquisition scenario, this number either disappears or changes (depends on how the acquirer finances it). that being said, interest is a real cost to this business but the good thing is WELL borrows by way of LIBOR for the CRH facility and CDOR for the MyHealth facility. 1-6 month LIBOR is 11bps-39bps and CDOR is <50bps. that is 2-3% all-in annualized interest? will have to look at the FYE statements for the full breakdown because last quarters interest was $3MM+. the newly issued debenture also has a 5% coupon which would be fixed. in any event, WELL's interests costs are fairly low because they have mostly senior secured bank debt. I believe short term money markets will remain cheap for some time but notwithstanding, the business can absorb some interest rate increases, they have cash to debt service. if they don't, they will trip a bank covenant and investors will know.
i'm invested in WELL because I believe they are building the business to sell. EBITDA is a key metric in M&A whether you believe it or not. this company has a significant amount of one-time expenses and non-cash amort. you can't ignore that. I recognize that companies can play with "one-time expenses" and EBITDA add-backs, but we can let the dust settle from 2021 and see what happens on that front.
bandit69 wrote:
Did they pay the second $10MM (plus interest) tranche of the promissory note on January 15th? How? all cash or did they issue some shares like the first tranche? I didn't see a news release. How will they pay the remainder in April (+ interest)? issue more shares and dilute some more? at a lower price? or will they have the cash?
not sure what they are doing with the MyHealth Note. there wouldn't be a news release for this unless they missed it and defaulted.
remember that it's somewhat friendly debt. the vendors of MyHealth received share consideration as part of their deal so we can be sure they are incented to see a strong share price. management also continues to run the subsidiary. if WELL had planned on issuing shares to satisfy this VTB/Note, and now can't (or won't) because of the share price weakness, it wouldn't shock me if the Note payment is deferred or payment restructured in some way.
they might have also used the proceeds of the $70MM debenture to satisfy the payment(s).