Avation Share Discussion Threads

[harrogate] 09/2/2021 13:50

Well that didn't work out as I expected I thought if they pushed them out at this sort of rate and for 5 years and as you say callable at any time that the equity would about double from here but it is very hard with everything going on and the major aircraft sales tied in with this deal and clear cash collection issues to estimate even an approximate NAV per share which is what is needed to value the shares my gut still says this has bought them time to do what they need to come out the other side but equity value at this point is impossible to judge. Hence the lack of movement today

[wigwammer] 09/2/2021 13:38

And.. "The Company retains the option to refinance the Notes at any time. " ... callable.

[wigwammer] 09/2/2021 11:50

The doubters are struggling, and they know it :)

[russman] 09/2/2021 11:49

"cashless exercise option" Jeff grimaces.

[cc2014] 09/2/2021 10:17

hmm. I'd say the management have done well although some information on the new covenants would be helpful.

Refinanced at somewhere between 8.25% and 9.0% depending on how things go plus warrants equal to around 10% of share capital which may or may not be worth anything depending on how thing go

For info
As of 31 December 2020, there were US$342.6 million of Notes and US$731.3 million of senior secured borrowings outstanding. The weighted average cost of secured debt was 3.7%, and the weighted average cost of total debt was 4.6%. Maturities on secured borrowings range from 2021 to 2031.

[wigwammer] 09/2/2021 08:47

No sign of 11% coupons or material dilution (warrants around 10%).

[russman] 09/2/2021 07:49

Not a bad proposal. Hope bondholders agree.

[wigwammer] 08/2/2021 14:36

IAG up 11% since a-game made those comments, and 70%+ up from the lows. Market increasingly looking toward recovery and sentiment can change quickly :)

[quepassa] 08/2/2021 13:19

Yes.

a-game , he's on the ball and knows the sector sentiment well

"this, along with other airlines, are currently stand out shorts. I strongly suspect they'll need to raise large amounts of cash very soon. Mutants are going to wreck havoc with global travel. We could be looking at a worse 2021 than 2020 for airlines the way things are now playing out with drawbridges being pulled up."

:)

[wigwammer] 08/2/2021 12:17

Hurry.. while stocks last :)

[quepassa] 08/2/2021 12:14

good post by a-game

"this, along with other airlines, are currently stand out shorts. I strongly suspect they'll need to raise large amounts of cash very soon. Mutants are going to wreck havoc with global travel. We could be looking at a worse 2021 than 2020 for airlines the way things are now playing out with drawbridges being pulled up."

[wigwammer] 08/2/2021 12:09

Hmm... Order book suggests small time shorter going into reverse gear. Think I'll buy more :)

[quepassa] 08/2/2021 12:04

good post by a-game

"this, along with other airlines, are currently stand out shorts. I strongly suspect they'll need to raise large amounts of cash very soon. Mutants are going to wreck havoc with global travel. We could be looking at a worse 2021 than 2020 for airlines the way things are now playing out with drawbridges being pulled up."

[wigwammer] 08/2/2021 11:58

REGIONAL travel....... Posters should familiarise themselves with the sort of thing written about Marstons near the bond/equity lows. Now 400% above that low. Perceptions can change quickly :)

[quepassa] 08/2/2021 11:19

this is the interesting post written by a-game just a few days ago on the IAG bulletin board (post 21564 of 25/1/):-

"this, along with other airlines, are currently stand out shorts. I strongly suspect they'll need to raise large amounts of cash very soon. Mutants are going to wreck havoc with global travel. We could be looking at a worse 2021 than 2020 for airlines the way things are now playing out with drawbridges being pulled up."


if what a-game says about airlines, COVID MUTANTS and the sector is correct, it doesn't sound very encouraging for the airline industry and their cash-flows in 2021.

[wigwammer] 08/2/2021 10:12

Jeff Chatfield, Executive Chairman of Avation, said: "We anticipate that on recovery from the COVID-19 pandemic that regional travel will improve extremely rapidly, and that ATR aircraft represents the ideal solution for short duration sub 100 seat routes".... posters should also note the rapid recovery in valuations in the pubco sector, another asset intensive and debt leveraged market, highly sensitive to covid. ATB

[quepassa] 03/2/2021 12:46

I hope you are right about APAC but APAC is not without its significant challenges.

One of Avation's former biggest customers, Virgin Australia was from APAC and they went into administration last year as even they couldn't get additional funding from their stellar group of shareholders and financiers.

Many smaller independent APAC airlines have folded.

And now, embattled Philippine Airlines - an Avation customer- are facing further challenges, yesterday announcing that they were cutting another 2,300 jobs.

An article in business.inquirer today is worth reading (link below) and also mentions PAL's planned filing of Chapter 11 creditor protection in the USA and the the finalisation of a $5bn debt rehabilitation program. The article also mentions "the deferral of lease payments for aircraft".


hXXps://business.inquirer.net/316914/pal-to-cut-2300-jobs


ALL IMO. DYOR.
QP

[a_game] 01/2/2021 14:45

QP - agree, I don't think it's going to be a great year for airlines but beyond this year things will return to normal. Bondholders can surely, like most of us, see the long term potential here.

Plus, we're quite heavily weighted towards APAC who are doing much better than EMEA

[russman] 01/2/2021 09:44

AVAP is in the middle.
It is not in a good negotiating position.
Cashflow is suffering by supporting its customers.
Have to give a warrant kicker to the bondholders.
But how big?

[quepassa] 31/1/2021 21:29

hey a-game,

this is an interesting post you wrote just a few days ago on the IAG bulletin board (post 21564 of 25/1/):-

"this, along with other airlines, are currently stand out shorts. I strongly suspect they'll need to raise large amounts of cash very soon. Mutants are going to wreck havoc with global travel. We could be looking at a worse 2021 than 2020 for airlines the way things are now playing out with drawbridges being pulled up."


if what you say about airlines and the sector is correct, it doesn't sound very encouraging for the airline industry and their cash-flows in 2021.

[a_game] 31/1/2021 19:59

I agree with you donogh - it's almost a case of shooting yourself in the foot if bondholders do not adopt a slightly longer term view and see that Avation will be trading very profitably once again in the not too distant future. I remain confident here

[wigwammer] 31/1/2021 12:08

I'd also like to thank those who have contributed knowledge. Good to chat :)

[wigwammer] 31/1/2021 12:06

Thanks Donogh. You make some good points. I would add that the company has bought back both equity and debt over the last year, with the latter bought as recently as November. Perhaps the company is better positioned than outsiders to determine the appropriate value of these instruments. To repeat - the required yield is based on a perception that can change rapidly. Otherwise - it is tail wag dog. This time last year AVAP was approached. The shares were trading at around 300p at the time. In the event that interested party returns - at perhaps a discounted valuation - we will rapidly see the dog wagging its tail again. Why would they be interested? For the same reasons I previously outlined. Nobody has provided any decent reasons why this business - given a modest amount of time - cannot return to generating previous levels of operating cash flow. ATB

[donogh] 31/1/2021 11:41

Thanks CC2014 and Wigwammer for insight into the bond situation and potential outcomes.

The context to discussion with bond holders is that Avation has very proactively managed cashflow through the pandemic, banks which have secured debt have been supportive, there is large management shareholding in the company and debt only very marginally increased between 2019 and 2020.

My belief is that bond holders will understand the need to give the company enough breathing space to recover as it's in no ones interest to force a position where management become disincentivised to continue their efforts.

[cc2014] 31/1/2021 09:07

I think you guys may be misunderstanding the situation.

We are not in the position were the bonds were issued at 6.5%, the company has had a bit of a rough time and currently trading at 10% and therefore there is some negotiation going on as to whether they are refinanced at a price close to 10%.

These bonds are trading at 125%, yes 125%. And I do mean 125% not 25% as I've demonstrated in the two posts above. Nothing that is trading at 125% is going to get refied at 11%. Or rather if it gets refied at 11%, the bondholders are going to want something like a 90%+ equity holding for free because they are going to have to put in more equity capital to make the numbers add up.


Finally I have an additional question. If the bonds are refied at 11%, does AVAP generate enough cash to pay the interest and principle? or is the model broken?