RYM-Ryman

[lorraina]

No update on your Papa moving into a Ryman unit.
Moving in with you instead.?.......[ lol ]

[Teitei]

Do total investment property assets to equity ratio.

I have it at $8.7 billion to $3.6 billion so 2.41 times.

Means a 10% fall in property values impact NTA by 24.1%.

NTA as at 30 Sep 2022 was $7.13 so allowing for say, 15% fall in property values will reduce NTA by 36% = $4.56.

RYM sp today at $6.30 implies market sees RYM's property values only down 5% - rather heroic assumption.

Surely a capital raising is on the way to reduce debt.

And Ryman disappointed some by doing a $902m capital raising.

They were hoping that Ryman would keep the leveraged balance sheet for when the property market turns.

[Minimoke]

Given virtually all the money is going to USPP I reckon there has been a breach of covenant. And given they are only going to net $30m in cash I wouldn't be holding out on an increased/renewed build rate.

Biggest worry is they were prepared to hand out a dividend at the end of last year and now all of a sudden the wheels are falling off.

[BlackPeter]

I'm not a financial advisor so I'm not advising anyone to do anything.  All I can say is that I never have this problem, as I would not be in the position of being a current RYM shareholder, therefore would not have to decide to take up rights or not. 

The problem with capital raisings done at big discounts that trash the share price (and therefore disrupt the TA) and designed to bail companies out rather than to grow them and add future earnings, is that there still remains the risk of more downgrades in the future. 

Fair enough ...

From a personal perspective I found it previously ways more often than not profitable to invest into "distressed" CR's of solid companies ... but hey, I am not a momentum trader (i.e. I come into this situation when I buy fundamentally undervalued assets) :

To be honest - I remember more profitable CR's at the backend of a downtrend than I remember profitable CR's during an uptrend (latter frequently with the benefit of hindsight turn out to have been too dear). I suppose you come across the later category ... always good to buy in an uptrend, isn't it?

[Basil]

What a mess.  They just diluted future years eps a lot and they kept using the word prudent in the narrative about this capital raise.  Reduced build rate going forward with reduced margins on much higher number of issued shares.
Still a growth company?  Worth $5?  Hmmm

[KW]

No update on your Papa moving into a Ryman unit.
Moving in with you instead.?.......[ lol ]

I was wondering what Chch villages they have put on the backburner and if the Kevin Hickman was one of them LOL

He hasnt done anything, he's a worse procrastinator than me.

[KW]

Given virtually all the money is going to USPP I reckon there has been a breach of covenant. And given they are only going to net $30m in cash I wouldn't be holding out on an increased/renewed build rate.

Biggest worry is they were prepared to hand out a dividend at the end of last year and now all of a sudden the wheels are falling off.

There has definitely been a discussion around covenants.  Slide 25 on the investor pack. 

Banking syndicate update
• Ryman has received approval from the majority of lenders for an amendment to the Interest Coverage Ratio (ICR) covenant until March 2026 on all institutional facilities, with further approvals not required
• Ryman sought an amendment to the Interest Coverage Ratio covenant as a precautionary change given the recent rapid changes in interest costs

Looks like USPP dug in its heels and did not negotiate, but instead asked for its money back.

And they are not getting to keep $30M - thats the cost of the cap raising, and it all goes to Macquarie and UBS. 

[KW]

Fair enough ...

From a personal perspective I found it previously ways more often than not profitable to invest into "distressed" CR's of solid companies ... but hey, I am not a momentum trader (i.e. I come into this situation when I buy fundamentally undervalued assets) :

To be honest - I remember more profitable CR's at the backend of a downtrend than I remember profitable CR's during an uptrend (latter frequently with the benefit of hindsight turn out to have been too dear). I suppose you come across the later category ... always good to buy in an uptrend, isn't it?

Its the time value of money that I pay attention to - if you invest in distressed companies it may be years before they recover, in which case your money is locked up, and you are precluded from earning anything in that period.  And you run the risk that they do not recover at all.  
I always ask "what is the purpose of the raising" - if its to grow earnings, either by acquisition or investment in something, then I am usually in.  If its for "working capital" or debt repayment, then I'll usually pass, as with those ones the share price usually drifts back to, or below the issue price because the CR soaks up most of the buyer demand, and those looking to stag the raising try to exit.  
My new catch phrase for 2023 is "there is no more free money"  so I expect to see a lot more cap raisings of both types, those needing funds to keep growing, and those needing funds to bail themselves out. 

[snapiti]

RYM just paid a divi and done their first divi reinvestment scheme at $6 plus.......now offering shares for $5......hmmmmmm property prices still dropping quickly.....always costly to go back to lenders and renegotiate covenants

[Waltzing]

IF A 4TH TERM comes in to being and the M Party call for Capital Gains all these companies are going to get hit hard...

and after Chipie turned up in an Organge telly Tubby suit the public might just be silly enogh to think he has saved them single handly and vote for him in an early election...

https://www.youtube.com/watch?v=LBNctIlzE1I
 

[Basil]

It would be interesting to crunch some numbers on this if property falls another 15% in calander 23.

As I see it gearing inclusive of residents loans is still very high in the late 60% range even after this desperatly needed capital raise so a fall of that magnitude is effectively tripled in terms of its effect on ,NTA.

It's not hard to come up with a perfectly plausible scenario where NTA halves this year.

With all the raise going to repay USPP loans and costs and the new build rate declining this looks like a bit of a lame duck to me.

Anyone notice REINZ stats out this week with lowest January sales since 1992?  People have to sell before buying. Trouble coming with Ryman's sales?

Said it before, the magic with this ended a long time ago when Simon Challis left.  No interest even at $5 as far as I am concerned.

[Waltzing]

"January sales since 1992"

tiny old sub DIV property next door sold to some plumbers for 860 back in december....

1/3 the size of the surrounding properties up a long sealed drive...

it reminded me of 2008...

 

[Basil]

NBR reporting staggering penalties of $134 million for early repayment of USPP debt!  Add another $30m? of costs to fund this raise and that figure rises to a staggering $164m.  What a complete fiasco. 

[winner (n)]

NBR reporting staggering penalties of $134 million for early repayment of USPP debt!  Add another $30m? of costs to fund this raise and that figure rises to a staggering $164m.  What a complete fiasco. 

Begging bowl out big time and nearly all proceeds going to these US Private Placement guys .....NBR did mention the word 'rort'

Punters think you cool when you borrow from these USPP things but things can go terribly wrong if you get on the wrong side of interest rates and/or currency movements

[KW]

NBR reporting staggering penalties of $134 million for early repayment of USPP debt!  Add another $30m? of costs to fund this raise and that figure rises to a staggering $164m.  What a complete fiasco. 

That is probably still a lot cheaper than rolling it over onto higher interest rates for the rest of the term.