- Keybridge meets its required debt milestone to 31 December 2012
- Corporate debt now reduced to US$27 million (further reduction to US$25 million required by 28 February
2013)
- Company working towards repayment of its remaining debt by June 2013
Investment Portfolio Update
Keybridge continues to wind down its existing investment and loan portfolio with the purpose of repaying its
remaining corporate debt.
In the three months to 31 December 2012, the Company repaid a further USD3 million of its corporate facility.
This repayment was achieved with funds derived from regular income, retained cash and asset realisations.
The Company also received a further USD0.8 million from its US Private Equity investment arising from the
recovery of US taxes payable on the realisation that occurred in August 2012.
As at 31 December 2012, the composition by asset class of Keybridge's remaining investments portfolio was
as follows:
| |
AUDm |
% of Total |
| Aviation |
36.90 |
51.67% |
| Lending |
11.34 |
15.88% |
| Property |
11.86 |
16.61% |
| Infrastructure |
6.71 |
9.40% |
| Private Equity |
4.51 |
6.32% |
| Shipping |
0.09 |
0.13% |
| Total |
71.41 |
100% |
NB. Foreign exchange rates used: AUD1.00 = USD1.0385 and EUR0.7862.
Expected Realisations
As detailed in our October 2012 Quarterly Update, one of Keybridge's significant assets ($11.34 million) is a
loan to a Queensland-based motor vehicle leasing company. As we have previously advised, the owners of
that company have signed a non-binding Heads of Agreement to sell their vehicle leasing business to a major
international corporation. That party has now completed its required due diligence and definitive sale
documentation has been negotiated and agreed between the parties. Completion is subject to buyer
investment committee and Board approvals of the proposed transaction, subsequent execution and
completion of the sale documentation, and completion of customary conditions precedent for transactions of
this nature. If completed, Keybridge will be repaid its loan in full, thereby allowing the Company to meet its
milestone obligation to its bankers due by the end of February 2013.
The Company's largest remaining asset is a mezzanine loan secured by four Airbus A330-300 aircraft,
managed by our finance partner, GMT Global Republic Aviation Limited ("GMT"). One of these aircraft is
currently being returned off-lease with its present lessee at the contracted lease expiry. GMT has secured a
replacement lease on this aircraft to a new operator, and is presently negotiating a deal to sell the aircraft to a third party lessor (who already has an aircraft on lease to this particular customer).
GMT, in collaboration with Keybridge, is also investigating several alternative options for the other three
Airbus aircraft, which are currently on lease to a European operator through to December 2018. The
preferred option being pursued is an outright sale, which if successful, would deliver sufficient funds to allow
Keybridge to repay in full its remaining bank facility.
If completed on the terms anticipated the aircraft sales described above would result in a book loss of
approximately 10-12% to our 30 June 2012 carrying values for these assets. After adjusting for this aviation
loss and other asset movements, the Company expects a reduction in December 31 2012 NTA to 25 cents
per share (30 June 2012: 26 cents).
Debt Facility
The outstanding principal amount under Keybridge's corporate debt facility now stands at US$27 million
having been further reduced by USD3 million during the quarter. The facility has a maturity date of 3 June
2013.
The Company is required to reduce this outstanding amount by US$2 million by 28 February 2013. If we do
not achieve this February 2013 milestone, the Company's lenders have a right to review the terms of the
facility.
If the sale of the motor vehicle leasing business as detailed above is completed on or before 28 February
2013, the Company's debt will then be reduced to approximately USD15 million with further reductions
potentially arising from the completion of the aircraft sales referred to previously.
Cashflow
Keybridge currently has approximately $1.8 million of cash-on-hand. The Company expects to continue to be
able to adequately meet its fixed commitments of interest and operating costs from these cash reserves, from
operating income received and, if necessary, from asset sales.
Currency Exposure
The approximate currency breakdown of the Company's assets and liabilities is as follows:
| |
Assets |
Liabilities |
Net |
| US Dollars |
42.4m |
27.0m |
15.4m |
| Australian Dollars |
24.1m |
0.7m |
23.5m |
| Euros |
5.6m |
- |
5.6m |
This net foreign currency asset position means that the Company continues to incur exchange losses when
the Australian Dollar appreciates in value against the US Dollar and Euro. Since 1 July 2012, the Australian
Dollar has increased in value against the US Dollar and decreased against the Euro, resulting in an overall net
unrealised foreign currency loss for the Company.
Board Directors
As advised to the market on 14 December 2012, the Keybridge Board now comprises Mr Peter Wood,
Chairman, Mr Mark Worrall, Managing Director, Mr Bill Brown, Non Executive Director, Mr Nicholas Bolton
(representing the Company's largest shareholder, Australian Style Group Pty Ltd) and Mr Robert Moran
(representing the Company's second largest shareholder, Oceania Capital Partners Limited).
The Board will be reviewing executive management requirements of the Company in the near future, pending
outcomes on the various asset realisation strategies being undertaken and the departure in February 2013 of
the Company's Managing Director.
Keybridge Capital is a financial services company that has invested in, or lent to, transactions which predominantly are in the core asset classes of property, aviation, shipping, finance receivables and infrastructure.
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