Q: Peter and His Wonder Team
QTRH has had mostly bad news this past year. So they arrange a "credit agreement" and the stock is up 20% in 2 days. Please help me understand. Why is this so beneficial for its future. Thank you! Your insights are always helpful!
QTRH has had mostly bad news this past year. So they arrange a "credit agreement" and the stock is up 20% in 2 days. Please help me understand. Why is this so beneficial for its future. Thank you! Your insights are always helpful!
5i Research Answer:
Earlier in the year, QTRH's subsidiary, Quarterhill ITS, had fallen outside of certain covenant ratios (covenants required to maintain credit with the bank), but this updated credit agreement will secure a covenant relief period till the end of the year. Essentially, it helps the company maintain its debt levels and it provides the company with more working room to attempt to grow its operations and bring those ratios back in line with its covenants. Without the company being in line with its covenants, additional debt cannot be taken on, and this hinders future growth opportunities, thus a relief program gives the company more time to bring those ratios in line.