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Re: News and Stuff!
Posted by: IanSmithISA
Date: 04/01/2019 16:32
Good afternoon,

Ozzy Osbone
Debt can be re-financed though Ian. The 'repayment date' is kind of not the point. It's what the rate is at that point. I am slightly disturbed to see loans based on LIBOR. Even I can get finance on BOE + rates and I am small fry.

I agree, it can but only so often, most of the current debt is 2014 debt refinanced, rescheduled and rescheduled again.

Being overly glib on debt is how companies in the UK like Carillion, Interserve, Kier etc got into so much difficulty. The lenders stand to lose so much that they won't say no, until one day the lenders do said "No".

Currently interest seems to be pretty low at around 300,000 per year, that's one spectacular crash.

What is more worrying is what loan covenants exist, a 15million drop in constructors prize money would suggest that any that are based on income or earnings may be in danger of being breached, unless sponsorship can be increased.

This is not a theoretical point, if this occurs lenders will give very serious consideration to immediate loan recall, generally covenants are established on the basis that if they are breached then not getting the loan repaid is looking likely anyway.

Williams seems to be safe in that even a fire sale would probably pay of debt, but it would leave the team owning little, running a mid/rear of the field car and with no advantages over the factory teams and the factory supported teams.

Had Williams gone for a Honda engine deal it would easy to see how debt would have disappeared very quickly and even thought the short term results may not have been great the future would have looked more secure.



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