What happened to Transfield Services’ Shares?
Shares of Transfield Services Ltd [ASX:TSE] soared more than 11% Wednesday, closing at the highest level since 26th November after the company successfully completed a restructure of its debt facilities.
Why did this happen to Transfield Services’ Shares?
Transfield Services had a potentially major debt problem brewing for the end of this year. In December it was due to repay $275 million to creditors. That’s a lot of money for a company that had just $178 million in cash and had made a loss of $250 million for the last financial year. The debt refinancing means the company should have a secure future until its next debt obligation falls due in 2017.
What Now for Transfield Services?
Transfield Services operates in the mining, energy, road, rail, water, power, telecommunications, and defence industries. It provides operations services, maintenance, and project management expertise.
The Transfield Services share price had been in a tailspin since late 2009. The share price has fallen from above $4 to as low as 66 cents. Today’s debt news has pushed the share price to a close today of $1.20.
Under the deal Transfield Services has refinanced a US$325 million debt facility that will now mature in May 2020. It has also completed a financing deal for a further AU$400 that will mature in July 2017.
It has been a tough time for all industries connected to the mining sector. That’s especially true for mining services companies. But now that Transfield Services has refinanced its debt this should give the company the upper hand when negotiating contracts with prospective customers. With Transfield’s debt problems in the past, this could be a great opportunity for the company to grow.
Cheers,
Kris+
