Q: They have continued to struggle and are issuing new debts at 8.25% - is this a good risk /reward play? I assume a divy cut is in the cards
5i Research Answer:
Investors are expecting a dividend cut, but the debenture issue might buy the company more time on this. With an 8.25% coupon the debentures are interesting and rank higher than the shares, but this remains a small company in a very weak environment, with weak growth. We do not find either that particularly attractive today.