I understand refinancing to a point...the money is used for basic upgrades of facilities, paying off and refinancing previous loans and such but I'm confused about purchasing "senior notes". Is this standard procedure or is there a motive behind this that I'm not aware of? I own stock in this company and I get a little uncomfortable when they start talking about refinancing $700 million, I'm a worrier by nature LOL.
2006-06-27 19:19:53 · 3 answers · asked by brandiwynter 2 in Business & Finance ➔ Investing
On the face of it, this sounds like good financial management by the firm.
If it were financially shaky, they couldn't get bank cooperation to do this --so-- thumbs up.
2006-06-27 19:27:33 · answer #1 · answered by urbancoyote 7 · 0⤊ 0⤋
It is hard to say if it is good or bad, because you don't give enough information.
Are they refinancing with debt or equity? If equity, then that makes your investment less risky -- but also means that you share the upside with them. This could be good or bad.
Are they using debt? If so, what does th new debt look like compared to the old? Is it higher or lower interest rate. If they are refinancing into a higher rate, this is probably not good news.
On the other hand if they are borrowing more than they need to pay off the senior debt -- that could be a good thing. It is possible that the senior debt had restrictive covenants that kept them from expanding fast enough. Getting rid of that debt could free them up to take on more profitable projects.
2006-06-28 02:56:08 · answer #2 · answered by Ranto 7 · 0⤊ 0⤋
You own stock in a "privately held company". Interesting.
Your information is skimpy, so I'll make my guesses.
If the "senior" notes are selling at a discount AND the company is profitable AND the new debt is at a lower interest rate, it is a good move.
2006-06-28 08:25:30 · answer #3 · answered by Puzzleman 5 · 0⤊ 0⤋