Companies without debt

[Lewylewylewy]

I hear that trademe don't carry any debt, are there any other companies on the NZX that also don't have debt?

[Snow Leopard]

I hear that trademe don't carry any debt, are there any other companies on the NZX that also don't have debt?

You hear wrong, they have $165M of bank loans !

Best Wishes
Paper Tiger

[Jantar]

NWF effectively have no debt. They have no bank loans, but they do have a financial liability in the form of a lease arrangement. At the last Annual report the value owing on that lease over the remainder of its term was $9.4M But countering that they held over $10M in cash and term deposits.

[silverblizzard888]

Burgerfuel!

[forest]

PEB and XRO

[karen1]

HLG fits the bill

[skid]

Thats a good place to start ,but it certainly doesnt always mean success--If you have enough cap raisings you technically wont have debt (your shareholders carry that debt for you) Some make more income from their shareholders ,than their product.

[LAC]

Briscoes I think

[Lola]

I hear that trademe don't carry any debt, are there any other companies on the NZX that also don't have debt?

Diligent Corporation

[littletramp]

Why would a company not want any debt in the current low interest rate environment? If you have a successful business, is this not the ideal time to leverage up to a sensible degree?

[iceman]

Diligent Corporation

And also has lots of cash in the bank. Not many companies on the NZX, if any, better positioned in that regard !

[Hectorplains]

Burgerfuel!

That was the case back in Sept, when they announced $5.8m cash reserves and no debt. I wonder if it's still the case given the expensive Aust and US roll outs they outlined in the same report.

[percy]

Why would a company not want any debt in the current low interest rate environment? If you have a successful business, is this not the ideal time to leverage up to a sensible degree?

Totally agree.

[Nigel]

In some cases, having no debt means the banks won't touch them. So no debt is not always a good thing!

[Snoopy]

I hear that trademe don't carry any debt, are there any other companies on the NZX that also don't have debt?

SCT will have all their debt wiped as soon as the just completed rights issue is given the final OK by the overseas investment commission. They are not expecting problems getting approval.

SNOOPY

[fungus pudding]

In some cases, having no debt means the banks won't touch them. So no debt is not always a good thing!

I'm sure that is not why the banks won't touch them. Rather it's because the banks won't touch them that they have no debt.

[LAC]

Why would a Bank not touch a business which has no debt? If its a profitable business and they need a reasonable loan...I would think a bank would jump at the opportunity as their risk will be low. Sorry if it's a stupid question but I just don't get it. I am just looking at it in basic terms like the 1st property I purchased, bank was over the moon to lend me $, the 2nd property they made me jump though hoops and the 3rd well I had to beg cos I had TOO MUCH debt so the risk was high for them (Bank) how is this different with businesses?

[Tomtom]

[QUOTE=littletramp;605234]Why a company not want any debt in the current low interest rate environment? If you have a successful business, is this not the ideal time to leverage up to a sensible degreeQUOTE] One day they'll have to refi however and will the prevailing interest rate be as low when they do? Also you have to look at the reason for borrowing, is it for growth or some sort of financial engineering?

[fungus pudding]

Why would a Bank not touch a business which has no debt? If its a profitable business and they need a reasonable loan...I would think a bank would jump at the opportunity as their risk will be low. Sorry if it's a stupid question but I just don't get it. I am just looking at it in basic terms like the 1st property I purchased, bank was over the moon to lend me $, the 2nd property they made me jump though hoops and the 3rd well I had to beg cos I had TOO MUCH debt so the risk was high for them (Bank) how is this different with businesses?

Of course a bank will lend to a business with no debt, as long as the business can offer security. Some 'businesses' are pie-in-the sky ventures that are built on little more than an idea with overheads and few assets. That's when banks won't lend, and rightly so. If a business has no debt that will often be the reason - they simply aren't viable for funding. Read Nigel's post as 'having no debt means the banks wouldn't touch them because they're not viable, not because they are debt free,' In that sense having no debt may be translated as 'can't find a lender'. I'm sure that's what he meant.

[LAC]

Ah I understand what he meant now FP.

[Nigel]

Yep, that's exactly what I meant. Having no debt on a balance sheet may simply reflect that the company is such a high risk that a bank will not lend money to them. The only way the company can get money is capital raisings from excitable/gullable shareholders. Note to self - must be clearer in future.

[macduffy]

Of course a bank will lend to a business with no debt, as long as the business can offer security

Yes - and no.

The capacity to repay from a future income stream is more important, from a bank's perspective. Recovery by realising on security, which may or may not have held its value, is a last resort.