June 1st $540M in debt coming due. Bill Watkins was right. It is all about June.
6 replies (most recent on top)
The issue isn’t about finding somebody to lend the money. The issue is the debt convents on the existing debt. As profits have disappeared the leverage ratio has gotten worse. Seagate already renegotiated the covenants but the relief is only temporary.
Maybe the Seagate employees who survive the purge could help by assuming a portion of the debt personally? I must get ten 0% Chase and Citibank balance transfer offers a week. It’s not a great plan but it’s no worse than what Heavy D and Fr#do came up with. So don’t throw those balance transfer offers in the trash Heavy D needs our help.
No. Not planning to try and roll this debt over.
From the Q3 analyst call:
Q:Luca, I know you mentioned talking about paying down the $540 million maturity in June. But can you maybe just help us understand some of your sources and uses in cash over the next, let's call it, 6 to 12 months, how you're thinking about your liquidity situation, just given your leverage is kind of quickly kind of creeping up towards that 5x number.
A: As you said, we already discussed about the repayment coming in June about $540 million. So we are very focused on reducing the debt as to the leverage. We are generating free cash flow -- positive free cash flow every quarter until now. So part of that free cash flow is also going to help with the repayment of the debt. We have other sources that we are looking at. One of those that we discussed in the past is some sales and leaseback of nonmanufacturing buildings that we are working on right now. So all this will help with our debt covenants. And if we need to do more, we can do more.
Last issuance was 9.625%.
Again, Seagate will likely try to roll these over into new debt issues; the questions are 1) who will be willing to hold these bonds, and 2) how high will the interest rate have to go to attract bond buyers.
Another 570M to pay before next Mar.