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Velti Halka Acık Limited Şirket Message Board

  • pjmyers_tsi pjmyers_tsi Nov 15, 2012 9:20 PM Flag

    Question for finance experts

    In the call it was stated (I am using rough figures) that cash is still about $29m, and about $35m of the HSBC loan facility remains.

    The original amount of the HSBC loan facility, if I am not mistaken, was $50m.

    So why has $15m of it been used when cash was still available? Is the interest rate on the loan facility lower than the return Velti can make on its cash?

    Sentiment: Buy

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    • After all the enlightening replies and commentary here, decided to ask the experts. Here was reply from Mr Cheung:

      Peter,

      $15 million was drawn down because: (a) about $8.5 million was used to pay down our existing debt with Black Sea Trade Development Bank as part of the closing conditions for the HSBC facility where we now pay a much lower interest rate i.e. LIBOR plus ~2%; (b) $5.1 million was used to take back the trade receivables as part of terminating our factoring program; and (c) the remaining $1.4 million was used as working capital for local subsidiaries so we don’t have to sell USD to buy EUR for certain subsidiaries and to avoid FX charges. In terms of mGage, please refer to our company website on examples of customer engagements.

      Thanks,
      Wilson

      Sentiment: Buy