TSX:SES - Post Discussion
Post by
retiredcf on Sep 22, 2021 9:07am
TD
Currently have a $7.50 target. GLTA
Secure Energy Services Inc.
(SES-T) C$4.17
Announces Debt Refinancing
Event
Secure announced a private placement of $140 million senior unsecured notes.
Impact: SLIGHTLY POSITIVE
Details: Secure will offer $140 million of 7.25% senior unsecured notes at an issue price of $100.75 due on December 31, 2026. The issuance of these notes are eventually intended to fund “multiple partial redemptions” of its 11% second-lien secured notes due 2025 “as soon as practicable” totalling US$100 million that it inherited as part of the Tervita acquisition. Recall that Secure had already redeemed US$100 million of Tervita’s 11% notes (full report).
TD View: Secure inherited a relatively prohibitive debt structure as a result of its acquisition of Tervita; so we expected that Secure would continue to take steps to reduce its cost of borrowing over time. However, it is our understanding that the Tervita notes are not callable until 2023; so we are somewhat surprised by the timing of this debt issuance. Although we believe that this refinancing will result in reduced borrowing and financing costs, we note that the price of the multiple partial redemptions are not disclosed. As a result, we will update our estimates once more disclosures are provided.
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