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  • BY: Andrew Hore |
  • POSTED: 12/02/2019 |

Iofina has restructured its debt but the iodine producer will have to pay more interest. 

Repayment of convertible loan notes has been extended from 1 June 2019 to 1 July 2020 and they will no longer be convertible. The interest rate will be increased from 5% to 7.5%. There was $22.4m outstanding on these notes.

Iofina had drawn down $3.26m of the $10m Stena secured facility and this will also last until 1 July 2020. The interest rate initially rises from 6% to 7.5% and then to 12% from June.

Management can seek alternative financing arrangements to replace the loan notes and loan facility, but it can also invest in additional production.

Trading is strong with record production in the second half of 2018 and iodine prices improving.

House broker finnCap forecasts a 2018 loss and then a swing into a pre-tax profit of $1m in 2019. These have been downgraded due to a later commencement of production from the IO#08 site. At 17.03p a share, the shares are trading on 27 times 2019 prospective earnings, falling to nine in 2020. 

Net debt is estimated at $23.2m at the end of 2018. That could fall to around $21m this year, after $2m of capital investment, partly on IO#8 to make it ready for production in early 2020.

finnCap has estimated a discounted cash flow valuation of 34p a share. That is based on an iodine price of $27.50/kg in 2019, slightly higher than last year, rising to $30/kg in 2020. 

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