Danakali Share Discussion Threads

[oaklandsway] 02/10/2002 10:57

phook, I meant for each Q.

you are right that the convertible carried 6.75% interest rate only & could still even better than long term credit offered by bankers. The good news is that someone mentioned in Yahoo that Danka's zero coupon is traded around $800 up from $500-$600 last week.

[forfaiter] 02/10/2002 10:56

.....The new facility means initially, they will be paying a HIGHER interest rate than the old facilty with its tiered interest rate structure, surely if they were confident of refinancing in the near term they would be better staying with the present facility...?

By taking a LONGER lower average indicates that the company, is assuming that it is stuck with the present credit facility for some time to come....

There is no way this company would have met its financial obligations by 2004....

[phook inell] 02/10/2002 10:48

oaks

you said

"The target is EBITDA around $30m, increase NAV, positive operating profit, and further debt reduction."

I assume you mean that for Q2 and Q3 combined ?.

[phook inell] 02/10/2002 10:45

agreed BUT bonds interest is usually relatively lower as its long term debt..... DNK has done quite well compared to that. The point being, the interest rate charge is not high by any means.

i believe they have issued convertible notes.... these carry interest rate of 6.75%. Not bad.

[oaklandsway] 02/10/2002 10:41

Do you understand the meaning of "sorting out debt with a strategy"? Be realistic! There are some experts behind the negotiation & I believe they are smarter than your opinion.

Firstly, try to get a softer term which we have discussed yesterday. This will save few millions of US$.

Secondly, Danka's advisers & bankers seemed to see a solution to prioritise bond payment in 2004 and give an open option for closing the credit facility.

Thirdly (this is my guess & IMHO), may be the bankers gave an option of "normal" debt facility already but Danka did not want to decide because of some reasons:
1. If Danka can get trough Q2 & Q3 very well then best credit facility might come.
2. If Danka can pay the bond due in 2004 then Danka may issue new bond to repay the balance of the credit facility. So, zero credit facility at all. This could be the best option because having zero credit facility means a start of paying dividend to ordinary shareholders.

Once again, Q2 & Q3 are crucial. IMHO

[forfaiter] 02/10/2002 10:37

Phook...bonds normally offer a higher interest rate to allow for the extra risk, and therefore attract investors to take them up.........ie if the company fails they will be behind the banks for whats left over....

Interesting to note what DNK bonds are paying....

[phook inell] 02/10/2002 10:23

ff

I see your point but its good business sense to stay with your current lender who has sustained you through bad times. Saying they could have got a better deal elsewhere may be right but knowing your lender well is also an important issue. Danka have created that business link with their lender and decided to stay with them. Going elsewhere would mean starting from scratch that business raport and not knowing the future holds with those lenders. A bit like those who have mortgages - many know they could get a better deal elsewhere but at the same time got to appreciate the service provided by the current lenders and good service provided by them.

Further the rates charged by Danka's lenders isnt extreme by any means.. LIBOR + 7.5% (comes to around circa 9%) is the going rate compared to current bonds and tender notes issued to certain companies. One has to remember this is a short term credit facility and not a long term debt deal which implies a higher interest charge.

Nice to see good discussion taking place. Appreciate your feedback.

[forfaiter] 02/10/2002 10:07

Oakyhead your missing the point...the old facility was onerous and so is the new facility......why couldn't they secure an alternative source of finance ?

The present bankers have not got much choice, other than pulling the plug, to continue supporting the company by extending the present facility.Remember the original facility was due to be paid in FULL in April 2004......along with a certain percentage of the outstanding bonds......last quarter they could only meet their financial obligations by dipping into cash reserves....

Finding support from an alternative source of finance ,and to be honest this deal would not be hard to beat.....would indicate true strength within the company...imho

[oaklandsway] 02/10/2002 08:52

Lucky me, stopped trading ARM few days ago & should see a trading range around 30p-40p.

[oaklandsway] 01/10/2002 22:21

The target is EBITDA around $30m, increase NAV, positive operating profit, and further debt reduction.

A statement of "stabilisation" will help a lot, I expect at the end of Q3.

Good night mate.

[phook inell] 01/10/2002 22:08

oaksland

what 'targets' are you looking at for q2 and q3 (and q1) - that is revenue/proft/etc

[oaklandsway] 01/10/2002 22:01

So, who keeps saying that paying a fee of $2,76m to get new credit facility is bad for Danka?

I tell you what Q2 & Q3 is crucial!!! If Danka can make good results then it could fly very high if not then we may leave.

$140m is not that much.

[phook inell] 01/10/2002 18:04

ff

why do you think c.9% is too high ? the going rate for bonds/tender notes is around 10% to 11%. so anything below this is quite good.

[phook inell] 01/10/2002 17:59

by: sophiegirl33991 10/01/02 12:56 pm
Msg: 37563 of 37563

"Note the urgency of reducing the debt." They had no choice. It was reduced debt or close the doors. The actions taken by management were not only predictable they were the only actions allowable by the lender. The extreme commitment to debt reduction leads me to believe that management is preparing the company for sale. If the institution that is currently accumulating large numbers of shares for themselves or for a third party, is part of the preparation for sale is yet to be determined. It will be interesting and enlightening to see who the next large purchaser will be. If it is a recognizable money fund, I will then understand that rapid appreciation is forthcoming. If it is a closely held fund I will than consider there may be one or more suitors. The consequence of either will be beneficial to me.

[shareman2] 01/10/2002 17:44

US going up, DANKY going down.

[forfaiter] 01/10/2002 17:06

LIBOR + 7.5%...is that a typo error ?....could have done better going to a loan shark.......jeez the banks sure see this company as high risk....enough said...

[johnymac] 01/10/2002 16:06

Maybe the re-financing deal will be kept for the AGM :



Lets hope they can pull something out of the bag to justify approving some of the directors perks mentioned in the resolutions.

[johnymac] 01/10/2002 15:48

I agree, not bad news, they are still left with the option to refinance the facility, without a penalty, and further reduction in costs have again been acheived. When the market turns, this one will be a winner.

[matt1231] 01/10/2002 15:47

No refinancing is disappointing.On one hand news is not bad but hardly going to set share price on fire.imho.

[oaklandsway] 01/10/2002 15:28

The news is not bad.

[phook inell] 01/10/2002 15:09

DANKA BUSINESS SYSTEMS PLC

('DANKA' OR 'THE COMPANY')

Danka to Relocate Into New St. Petersburg, Florida Headquarters and Extend
Senior Credit Facility

Headquarters Deal Will Consolidate Operations and Reduce Real Estate Liabilities
Senior Credit Facility Extension Gives Company Greater Security and Flexibility



Danka Business Systems PLC, a leading independent global provider of office
imaging systems and services, today announced that it will relocate from its
current corporate campus into a new, state of the art Corporate Headquarters to
be completed by next summer. The business transaction involves three properties
in St. Petersburg, Florida, including an unfinished 157,000 square foot building
located at 11101 Roosevelt Boulevard, which will become Danka's new Corporate
Headquarters under an agreement with the buyer to lease the property. The
buildings were previously owned by a tax retention operating lease (TROL)
facility, a financing vehicle under which Danka was the lessee of these
previously under-utilised properties.

Under the terms of the transaction, the Corporate Headquarters, Danka National
Supply Center, and a third support facility have been sold by the TROL to
Corporate Property Associates 15, Incorporated, W.P. Carey's newest, publicly
held, non-traded real estate investment trust (REIT) and a member of the $4
Billion W.P. Carey Group, for the sum of $31.4 Million. Danka has entered into
long-term leases to occupy the buildings. Danka's pre-existing obligations on
the buildings, which included payment of financing and other operating costs,
have been terminated and the net sum of $21.2 Million was paid to the TROL
lenders in full satisfaction of the obligations relating to such properties
under the TROL. Approximately $7.7 Million of the purchase price will be used
to complete construction and tenant improvements in the Corporate Headquarters
and support facility.

Danka Chairman and Chief Executive Officer, Lang Lowrey, commented: 'We are very
excited about moving into this new facility. By consolidating our corporate
operations we will significantly reduce our overall tenancy costs and at the
same time increase our efficiency. Uniting the vast majority of our St.
Petersburg employees under the same roof will improve interaction among our
corporate staff and accelerate our responsiveness to customers and our
colleagues in the field. At the same time, this initiative will enable us to
further reduce our real estate exposure.'

Danka announced that it has also entered into a contract with respect to the
sale by the TROL of the remaining three buildings on its current corporate
campus in St. Petersburg, which it will be vacating. The proceeds from this
sale will permit Danka to terminate the TROL arrangements in full. 'With the
closing of this sale, the TROL lenders will have been repaid $34.4 Million over
the past five quarters and we will have effectively eliminated our exposure to
the risk of real estate ownership,' commented Lowrey.

Danka also announced that it has exercised its option to extend its credit
facility with its senior bank lenders for an additional two years, through March
31, 2006.

'We are pleased to have extended our senior credit facility through the end of
our 2006 fiscal year,' commented Lowrey. 'This extension allows us to continue
our debt reduction initiatives and the opportunity to seek long-term financing
under more favorable capital market conditions.' Mark Wolfinger, Danka's Chief
Financial Officer, added 'We believe that our senior lenders have further
validated the success of our efforts over the past six quarters by granting this
extension in a very difficult lending environment and in a fashion which gives
us flexibility to address other elements of our capital structure.'

Danka's interest rate under the extended facility will be fixed at LIBOR plus
7.5%, provided that the facility has a Moody's credit rating of at least B2.
The extended facility consists of a term loan commitment of $121 Million, a
revolver commitment of $70 Million and a letter of credit commitment of $30
Million. As previously disclosed, Danka will be required to make term loan
repayments of $4 Million quarterly through March 31, 2003, and $8 Million
quarterly thereafter. Danka has paid an exercise fee of $2.76 Million for the
extension and, if the facility is not refinanced earlier, will be required to
pay commitment fees equal to 1% of the total commitments under the facility at
December 31, 2002, March 31, 2003, December 31, 2003, March 31, 2004, December
31, 2004 and June 30, 2005 and commitment fees equal to 2% of the total
commitments under the facility at June 30, 2003 and June 30, 2004. Danka's
outstanding balance under the facility as of June 30, 2002 were $140.5 Million,
down from $240.0 Million at June 30, 2001. There would be no prepayment penalty
in the event that Danka were to refinance the facility before its stated
maturity.

[lex1000] 01/10/2002 15:04

AZN topped out at 2002 and bobbing down,whilst DNK bid has perked up to 33p/34.5p. broke selling at a premium to US & back to old trends of following & being in line with the US it seems to me.

[lex1000] 01/10/2002 14:55

.....and back down again...