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Bar C

Discovery Air Rescued

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Well I can see this going to go the same way as other threads lately, you guys would rather them go bankrupt then,,,,that would do a whole lot of good.

 

Yes it is bold to think that it is better to keep companies operating, with a loan, then to watch them go south and paying for welfare or ei.

 

Stock market has very little good to say about anyone these days, that seems to a problem for more than just a few companies.

 

 

Am done, going to have another coffee

 

 

I don't want to see anyone go bankrupt. But if they do some other Canadian company will pickup the slack. Great slave started after Shirley folded as others have as well.

 

Although Great Slave employees many people i would say the majority are not living in the North. So why should the GNWT bail them out.

 

This goes back to 1 thing are they a viable company or not. It appears the Banks and Stock market don't believe they are.

 

DA has over paid for every company they have bought. Lets start with a real easy 1. $5,000,000.00 and 5,000,000 shares for Discovery mining. They own a half dozen pickups and some tents. Was GSL really worth $100,000,000.00 plus and then plus millions of shares tthey gave the old owners. This would make the average price of there helicopters around $1,000,000.00 after you take out buildings and land.

 

Discovery's head office is not in the north to the best of my knowledge. There president sure isn't living there. All there board meetings are held in Ontario or at least the public meetings so why isn't the Ontario government bailing them out.

 

As i said earlier no problem i just hope the GNWT have alot more money to bail out everyone else that is seeing the down turn in the economy. You know all those that can't ask the public markets for money.

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Some strange ideas and assumptions floating through this thread!

 

From what is in the news report, this is a refinancing of a debt that comes due February 1. I would be very surprised if the company didn't shop around for the best deal. Don't you shop around when your mortgage comes up for renewal? What is interesting here are the terms set by the Northwest Territories Opportunities Fund (whose business is probably to seek out businesses to invest in) 10% per year. I wonder what the major financial institutions wanted for terms? And their level of debt increases by 3%. If you read the financial details, the operation is still generating revenue and showing a 3rd quarter profit !!

 

There is an associated agreement that Discovery Air moves it's HQ to Yellowknife - probably not a bad move from the NWT point of view.

 

Calling this a bailout at this point is a misuse of the term.

 

 

 

This is a sweat deal for DA. I have bank investments that give me 8.5% return. So if banks are willing to pay 8.5% these guys got a sweet deal. I have spoke with 3 different investors about this today they all are shaking there heads saying this should be in the area of 12 to 14%

 

 

The word on the street from investors is this is a bail out. They tried shopping the market. The market had no interest.

 

They always claimed they were moving to Yellowknife. They said that when the bought GSL and still haven't done that.

 

As for the GNWT investing just 3 months ago they announced big layoffs due to the deficit. I wonder what the employees and unions think of this deal. No money to run the government. But they have money to invest in public companies.

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I would be very surprised if the company didn't shop around for the best deal. Don't you shop around when your mortgage comes up for renewal? What is interesting here are the terms set by the Northwest Territories Opportunities Fund (whose business is probably to seek out businesses to invest in) 10% per year. I wonder what the major financial institutions wanted for terms? And their level of debt increases by 3%. If you read the financial details, the operation is still generating revenue and showing a 3rd quarter profit !!

I agree that the company most likely would have shopped around for the best possible financing available and my guess would be that the major financial institutions may have declined the opportunity or would have wanted a higher interest rate on what could very well be a very high risk venture. If you take a look at what prime is (3.5%ish) and when the best deal you can get is 10% and you have to move your head office, obviuosly the lenders feel that there is risk there.

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I agree that the company most likely would have shopped around for the best possible financing available and my guess would be that the major financial institutions may have declined the opportunity or would have wanted a higher interest rate on what could very well be a very high risk venture. If you take a look at what prime is (3.5%ish) and when the best deal you can get is 10% and you have to move your head office, obviuosly the lenders feel that there is risk there.

 

 

If you borrow any money you will know 10% is an incredible good deal. As i said earlier i am getting paid a dividend 8.5%. Yes the prime rate is 3.5% but nobody will borrow you money for 10%

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If you borrow any money you will know 10% is an incredible good deal. As i said earlier i am getting paid a dividend 8.5%. Yes the prime rate is 3.5% but nobody will borrow you money for 10%

 

Huh? :unsure:

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If you borrow any money you will know 10% is an incredible good deal. As i said earlier i am getting paid a dividend 8.5%. Yes the prime rate is 3.5% but nobody will borrow you money for 10%

I would be interested in knowing where you can get a 8.5% dividend in this economy

 

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I would be interested in knowing where you can get a 8.5% dividend in this economy

 

If I told you that then everyone would be in on it and it would be a 1% return. However if you are willing to invest your capital with a little risk then 15% or even 20% is possible.

 

I could charge a finders fee though .....!!

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If you borrow any money you will know 10% is an incredible good deal. As i said earlier i am getting paid a dividend 8.5%. Yes the prime rate is 3.5% but nobody will borrow you money for 10%

I have to be honest, I have never borrowed $34m and I don't know what rates would look like at that level. A month or two ago I would agree that 10% would have been a not bad deal. Currently I believe if there is a good debt to equity ratio, one could do beter than 10% for 7 digits...maybe not 8, I don't know. The lenders have softened recently. That being said it is an unfortunate time for anyone to have to re finance.

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Isn't this "bridge financing" until the credit markets thaw a little? And why wouldn't credit be tough to get these days for a highly leverage aviation business dependent on exploration when commodity prices suck? And if DA can't get the financing in the market, who do you think is going to lend the $$$ to another aviation business intending to pick up some of the GSH assets?

 

I'm with Skully: Better bridge financing and services maintained than a messy collapse at a time when lots of other work is already "going South".

 

Cheers,

 

Dick

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