Green Dragon Gas (GDG) has announced that it has progressed discussions with the majority of its debt holders to extend existing debt maturities to 20 November 2018. Extensions are subject to the execution of amendments and an inter-creditor agreement between debt holders, and are expected to be finalised on or before 15 November 2017. GDG’s Nordic Bond (US$88m) will be extended to 20 November 2018 and the put option on GDG’s convertible bond (US$50m) will be extended to allow for conclusion of an inter-creditor agreement to provide it with the same security as the Nordic Bond Trustee but subordinated. Our current valuation and financial forecasts (shown below) are under review.
Written by
Green Dragon Gas |
Debt maturity extensions |
Bond update |
Oil & gas |
31 October 2017 |
Share price performance
Business description
Analyst
Green Dragon Gas is a research client of Edison Investment Research Limited |
||||||||||||||||||||||||||||
Green Dragon Gas (GDG) has announced that it has progressed discussions with the majority of its debt holders to extend existing debt maturities to 20 November 2018. Extensions are subject to the execution of amendments and an inter-creditor agreement between debt holders, and are expected to be finalised on or before 15 November 2017. GDG’s Nordic Bond (US$88m) will be extended to 20 November 2018 and the put option on GDG’s convertible bond (US$50m) will be extended to allow for conclusion of an inter-creditor agreement to provide it with the same security as the Nordic Bond Trustee but subordinated. Our current valuation and financial forecasts (shown below) are under review.
Year end |
Revenue* ($m) |
EBITDA |
PBT** |
Debt |
Net cash/ |
Capex |
12/15 |
37.7 |
20.1 |
(0.1) |
(135.2) |
(108.3) |
(47.8) |
12/16 |
29.1 |
10.5 |
(12.3) |
(144.1) |
(127.9) |
(14.4) |
12/17e |
31.9 |
16.1 |
(4.6) |
(164.3) |
(145.5) |
(7.5) |
12/18e |
51.3 |
35.1 |
7.3 |
(216.3) |
(202.6) |
(36.5) |
Note: *Including subsidy income. **PBT is normalised, excluding intangible amortisation, exceptional items and share-based payments. This step-up in revenues is contingent on ODP approvals in 2017, access to RBL debt and a significant step-up in GSS drilling activity.
Nordic bond: Bond maturity is to be extended by one year from 20 November 2017 to 20 November 2018, following execution of the amendment. Under the amendment, the bond interest rate will be 10% until 30 June 2018 and 12% thereafter until maturity. All interest will be accrued through 30 June 2018 and paid in cash thereafter. The bond redemption is to be increased to 107.5%, if not redeemed by 30 June 2018 at 102 as per the current bond.
Convertible bond: The convertible bond and Nordic bond extensions are expected to be effective with the inter-creditor agreement being executed. Once effective, GDG will have no debt obligation maturities through to 20 November 2018.
Edison view: In our view, this is a positive step for equity holders, and removes some uncertainty around imminent debt maturities assuming the inter-creditor agreement is signed by 15 November 2017. Our valuation and forecasts are currently under review but please see our previous research publications on GDG.
|
Disclaimer
|
|
Disclaimer
|
Research: Industrials
The reduction in Carbios’s operating losses in the first half of 2017 is positive. It was driven by revenue from Carbiolice for part of the period and the fall in external costs from the scheduled conclusion of the Thanaplast programme. The announced five-year partnership with L’Oréal shows confidence in Carbios’s technology. We have adjusted our DCF valuation range per share to €20-32 to reflect the latest capital markets activity.