Turners (TNR) bonds

[Snoopy]

So let's get going.

The standard we are looking for here ( p13 bond prospectus ) is:

1/ EBITDA/I > 1.25 ( Bank Borrower Finance Companies: Dorchester Finance Limited and Oxford Finance)
2/ EBITDA/I > 3.00 ( Non-finance Covenant Group )

FY2016	EBIT	DA	EBITDA	I	EBITDA/I	Pass Test?
Finance Segment	$14.619m	$0.173m	$14.792m	$4.770m	3.1	>1.25, pass
All Other Segments	$18.368m	$1.971m	$20.339m	$6.666m	2.8	<3.00, fail
Total	$32.987m	$2.144m	$35.131m	$11.436m

FY2017	EBIT	DA	EBITDA	I	EBITDA/I	Pass Test?
Finance Segment	$13.744m	$0.329m	$14.073m	$3.719m	3.8	>1.25, pass
All Other Segments	$22.237m	$2.534m	$24.771m	$7.361m	3.3	>3.00, pass
Total	$35.981m	$2.863m	$38.844m	$11.350m

Eagle eyed bond holders will see that the bonds were issued in August 2016, while FY2016 finished in March 2016. Technically you can't fail a test before the bond is issued. But these TNRHB bonds effectively replaced the TNRHA bonds which had similar covenants. So I think the FY2016 figures are useful for comparative purposes. The 'close fail' of the 'All Other Segments' statistic over FY2016 could have been fixed by allocating more head office costs to the finance division, as an example. Alternatively, because these covenants are subject to renegotiation, TNR could have gained a temporary exemption from their banking syndicate. In any event, nothing was publicised on the subject of TNR/TRA breaking their interest cover covenant at the time. So it must have all worked out

SNOOPY