I am a holder of TIMPB as well due to the suck II.
The good news is my two friends (they are actaul growers who bought Timbercorp Almond lots) told me they can afford to pay the interest to Timbercorp this year and will hold on since interest rates has gone down, otherwise they may default the 14 lots they bought.
The bad thing is based on the review of the Mar 08 half year Cashflow, I really don't understand how companies (not only TIM) by just borrowing or raising equities to pay for dividends or capital expenditures.
See interest costs has shoot up 14 million from 2007 although capital expenditure reduce 30 millions, they need to raise share placement of 60 millions for the half to cover the difference. Now they cannot borrow more and equity raising will dilute severly. What can you do ? Sale and lease back ? Luck !
Why can't managment limit spending from their operating income ? If you have no income then spend less and commit less. Growth may be very slow but you never go broke or sell everything to a Fund and only earn managment fee.
I hope the annual result announce two days later show some conversative capital spending.
Any thought ?
TIM Price at posting:
23.5¢ Sentiment: None Disclosure: Held
