Lenovo’s New Revolving Facility May Increase Gross Debt: Lucror
The group’s new $1b revolving credit facility comes as earnings are weak, albeit with some signs of a turnaround, according to a research note.
* The new facility will refinance certain near-term maturities and improve its liquidity profile, says Trung Nguyen, senior credit analyst at Lucror
* “On the other hand, it may increase gross debt, which has been on a downward trend since FY 2015-16”
* NOTE: The PC maker is marketing the 5Y revolver with a L+160 margin. That compares with a L+140 margin on its $1.2b 5Y loan due December
* Lucror is keeping a negative credit bias on Lenovo due to “industry headwinds” and ongoing business transformation.
* Earlier stories:
** Lenovo posts surprise net Loss as mobile business continues to struggle with shrinking revenue
** A $5b goodwill iceberg could sink Lenovo earnings: Gadfly
* NOTE: Spreads on the company’s $500m 3.875% 2022 bond have widened to +183bps from about 180bps before the earnings report, according to Bloomberg-compiled prices; they were sold at +180bps in March 2017
February 14, 2018, 03:54:07 GMT
By Annie Lee; Edited by Neha D'silva and Beth Thomas