$1.245 billion was raised in the last cap raising and placement.
On 11 April they paid down $250m of the ECA facility, saving $5.5m in interest per annum.
That leaves a little under a billion unaccounted for.
Barossa seems a way away, and Muruk won't be super capital intensive for a little while. Unless there is an acquisition in the wings, there is little they can do other than repay debt. I think this was the plan for mthe start - especially with ow much cash s left over fro mthe raising placement - approximately 1 billion.
$1.049 billion of euro notes can be redeemed on 22 September. These notes have an interest rate of approximately 8.25% - resulting in a $86.5m per annum interest bill, paid quarterly.
The only issue is that "The chief financial officer, Peter Wasow, said the hybrid note issue had been given 100 per cent equity classification from Standard & Poor's. As a result, the hybrid ''directly reduces the amount of any potential equity that may be required, on a dollar for dollar basis, to maintain Santos' BBB+ credit rating.''"
The big question is therefore what impact would repayment have on the credit rating, as you would essentially be using cash to repay something that is deemed, in accounting terms, to be equity. I'm thinking that the net debt reduction announced to day may have been enough; with the expectation that more will occur during the current quarter (prior to any redemption of euro notes).
Any thoughts?
STO Price at posting:
$3.28 Sentiment: Buy Disclosure: Held
