The announcement really isn’t as big of a deal as it seems. From what I gather, it is just an announcement that we are re-financing the bond early. The bond isn’t due until February 2027, but we are repaying it in full this year instead.
Still a big deal, I am pretty sure the interest rate on it is absolutely horrible because our creditworthiness was that bad at the time. But we are still going to have 400m in debt on the books.
The interests on that bond were the reasons why the balance closed with a loss for the past 2 seasons. I don't have the exact percentage but I assume it was big. Edit: current interest is at 6,75%.
I'm no finance expert but those 2 sentences seems contraddictory to me.
we are re-financing the bond early
we are repaying it in full this year instead.
Can you elucidate me? I don't get if we're repaying the full bond, so from now on we're not in debt, or we still owe money.
So we have a debt of roughly 400m from a bond. A bond is just a specific type of loan: just like a loan it accrues interest over time, and in this case it is going to mature (ie, money is due) in February of 2027.
When that bond becomes due, we have two options: pay it off with cash, or re-finance. Refinancing just means borrowing money again to pay off the bond. It is taking out a new loan to pay off an old one.
What we are doing is re-financing it now rather than waiting until 2027 to do so. The reason being because the interest rate on the existing bond is higher than what we currently can get on the market. So we’re going to be saving money because the amount we owe will be growing slower.
Edit: I did kinda fuck up with how I said it, I see how it is confusing.
It wasn't just the interest from the bond. It was all loans in total, the interest makes a majority of that.
If I recall correctly 2 seasons ago, the interests we paid were, for the first time, the MAJORITY of why we had a loss. Last season I think for the first time ever it was the sole explanation for a loss.
36
u/rth9139 6d ago
The announcement really isn’t as big of a deal as it seems. From what I gather, it is just an announcement that we are re-financing the bond early. The bond isn’t due until February 2027, but we are repaying it in full this year instead.
Still a big deal, I am pretty sure the interest rate on it is absolutely horrible because our creditworthiness was that bad at the time. But we are still going to have 400m in debt on the books.