Tuesday 24 October 2017 by FIIG Research Company updates

Company updates – AAPT, Frontier, Mackay Sugar, NCIG, NRW, Qantas and zipMoney

This week, Adani Abbot to release prospectus for USD500m issue, two new DirectBonds from Frontier Communications, update on NCIG junior debt and full research report on NRW notes, Mackay Sugar puts cogeneration asset sale on hold, Qantas to extend Emirates partnership and zipMoney 1Q18 results

Adani Abbot Point Terminal

AAPT coal terminal is set to release the prospectus for a USD500m bond issue to help refinance the debt of the export port. The issue is being marketed ahead of almost USD1bn in debt held by the port maturing at the end of 2018. 

Frontier Communications DirectBond approval

We have reviewed and approved two new DirectBonds from Frontier Communications. Both are fixed rate, senior unsecured notes that are available to wholesale clients only.

Security Coupon rate Maturity date Yield to worst  Running yield  Minimum parcel size 
9.25% 1-Jul-21 12.52% 10.22% USD10,000
6.25% 15-Sep-21 11.21% 7.38% USD10,000

Note: Yields accurate as at 24 October but subject to change

For more information, see the Frontier July 2021 and September 2021 Factsheets.  

Mackay Sugar puts cogeneration asset sale on hold

Mackay Sugar (MS) has put the sale of its cogeneration plant on hold and will instead look for investors to help pay down its AUD200m debt, and seek other options to strengthen the balance sheet. In a circular to growers, MS has stated that indicative bids to purchase the cogeneration asset were considered to be unacceptable. Following expressions of interest from the cogeneration tendering process, the Board has instructed Kidder Williams (KW) to run a process to seek proposals to recapitalise the business.

As FIIG research has previously stated, if management’s plans are not completed in a timely manner, there is a growing possibility that bonds may not be repaid in full at the 5 April 2018 maturity date.

Please see the latest Mackay Sugar update here.External link - opens in a new window Note the content requires a FIIG login.

NCIG junior debt still offering good value

We have provided a research update on Newcastle Coal Infrastructure Group's (NCIG) junior debt. 

NCIG continues its track record of successfully refinancing its debt well ahead of time, with the pricing of its USD500m 4.40% September 2027 10 year senior secured fixed rate bond transaction announced on 22 September 2017

This follows NCIG’s refinancing of USD634m of bank facilities in June 2017. NCIG now benefits from a more diversified pool of funding sources and lenders, having added investors from the US144A market to its existing pool of bank lenders and US private placement investors, as well as increased the average tenor of its debt.

The link to the full report is available here.External link - opens in a new window Note the content requires a wholesale login.

NRW Holdings Limited Notes

We have provided a full research report on NRW Holding’s notes, including full year 2017 results and company overview.

The link to the full report is available here.External link - opens in a new window Note the content requires a wholesale login.

Qantas partnership

Qantas and Emirates have applied for regulatory approval to extend their partnership to 2023. The airlines have announced network changes, with Emirates ceasing flights from Melbourne and Brisbane to Auckland from March 2018. Qantas is set to increase the frequency of its trans-Tasman services. 

zipMoney quarterly update

zipMoney released its first quarter 2018 update on 20 October 2017.

First quarter highlights:

  • Record quarterly revenue of AUD6.9m, up 22% on 4Q17
  • Transactions on the platform increased by 23% on 4Q17, reflecting a 34% increase in merchants and a 34% increase in customer numbers
  • Receivables increased to AUD176.4m, up 16% on 4Q17; Bad debts were 1.98%
  • Transaction volume reached AUD95.1m, up 10% over the quarter, noting 1Q follows a seasonally strong 4Q. Strong start to 2Q18, with volume processed October-to-date indicating a quarterly run rate of AUD115m
  • Westpac invests AUD40m at AUD0.81 per share for a minority equity interest of 17% in Zip
  • Importantly, zipMoney’s operating cost base has reached a level of stabilisation, which together with lower funding costs from the NAB facility and continued revenue growth, is poised to deliver a significant improvement in cash operating margin. The Company confirms its guidance for cashflow break even on a monthly basis in FY18
  • Iconic brands continue to join the Zip platform, including, Best & Less, Mitre10, Bras N Things, Beacon Lighting, Puma and Contiki. Growth in the merchant pipeline continues to accelerate with significant numbers of SMEs and large enterprise retailers at contract stage
  • Pocketbook reached record users of 385,000 and remains one of Australia’s leading personal financial management apps

The full report will be available on the ASX website.