SKT Sky Network Television Limited.

[Ogg]

Hi all, interested in your take on the balance sheet "strength" and the ability to repay the bonds due 31 March next year - $100m

There is essentially no cash on the balance sheet, appears that the use the bank facilities as a from of revolving credit. As at 31 Dec they appeared to have c. $84m of headroom in this facility (limit $200m, $114m of non bond borrowings). The facility reduces to $150m in July 2021 (i.e just after bond due). The whole facility expires in July 2022.

Cashflow appears positive, and may remain so over coming 1-3 months.

My questions

If sport gets cancelled long term will SKT receive any compensation for rights? What is the ability to pay from sports? Have they paid upfront or is there a run rate component?

What is scenario where SKT cant repay the bonds?

What is ability for SKT to screw bondolders in some way other than in a receivership or other process?

I'm consider buying bonds at current 60-70% yield for next 12 months

Interested in your thoughts?

-I'm not too sure about the sports situation. I assume it's the sporting clubs that are taking the hit as they are the ones that have taken pay cuts and have asked the government for bail outs. I doubt Sky would pay them upfront or would pay them money if no game happens. Interesting situation though. It depends how long it goes on for. 12 weeks isn't a long time considering the rights are for 5 years or so. At the moment, most sports fans aren't grumpy, but as more time goes on they will loose patience. Once the country drops back down to level 3, I would think some games could happen again with no crowds. Or games could be moved to areas of the country with less covid cases etc.

-The bond holders will get paid, just a matter by whom, either the existing shareholders or by a new owner.

-Bondholders can't get screwed over.

-60% yield looks tempting but I'm looking to make more than that with the equity.

[winner69]

Jeez these bonds now 80% (NZX)

$1 for $1.80 odds better than backing WINX.AU last year

[blackcap]

Jeez these bonds now 80% (NZX)

$1 for $1.80 odds better than backing WINX.AU last year

Come on winner, you know you want to have a go. 80% is looking pretty tempting.. Yeah that WINX was an amazing bet. As was the BCVA but that left a bit earlier.

In all seriousness, I would almost be tempted taking the bonds at 80% over the equity at 27 cents.

[winner69]

Traderx ....I’d get in quick if you want those bonds

I sense every man and his dog will want them and that 80% won’t last long.

[Arbroath]

Ogg

Be careful with statements like "Bondholders can't get screwed over" as they very definitely can. Why do you think they are trading at 55c in the $1.00
That price may or may not be too pessimistic but bondholders could definitely end up with either an outright loss or possibly effectively forced to take equity at maturity or risk Sky going under. Personally I'd rather own the bonds than the equity as it is higher up the foodchain but it is not immune from a haircut of some description.

[Traderx]

Ogg

Be careful with statements like "Bondholders can't get screwed over" as they very definitely can. Why do you think they are trading at 55c in the $1.00
That price may or may not be too pessimistic but bondholders could definitely end up with either an outright loss or possibly effectively forced to take equity at maturity or risk Sky going under. Personally I'd rather own the bonds than the equity as it is higher up the foodchain but it is not immune from a haircut of some description.

Hi there thanks for your comment. Interested in the mechanism that would have to occur for bondholders to be forced to take equity/haircut? Surely bondholders can take over the assets of the company (such as they are) to be paid in full?

Thanks

[Traderx]

Traderx ....I’d get in quick if you want those bonds

I sense every man and his dog will want them and that 80% won’t last long.

Haha still haven't pulled the trigger - there is a stand off at roughly 60 to 80% S/B!!

[Ogg]

Ogg

Be careful with statements like "Bondholders can't get screwed over" as they very definitely can. Why do you think they are trading at 55c in the $1.00
That price may or may not be too pessimistic but bondholders could definitely end up with either an outright loss or possibly effectively forced to take equity at maturity or risk Sky going under. Personally I'd rather own the bonds than the equity as it is higher up the foodchain but it is not immune from a haircut of some description.

Why would you buy the bonds. If the company fails the bonds fails. If the bonds fail the company fails.

If the stock doubles from here, it's still way below it's intrinsic value, not to mention the possibility of further upside on a take over deal.

Why risk putting your money in bonds which has the same risk as equity at the moment.

It's probably just nervous-nellie boomer retail holders selling the bonds now. Thinking that the world is ending. Those were the type of people who bought them in the first place. They're super defensive, penny counting investors.

The yield seemed to have spiked on the covid-19 situation, if it was related to the business, then we would have seen a gradual rise in the yield over the last year but that's not the case. It's just ballooned on low volume all of a sudden.

[airedale]

I just got a call from a Sky rep who offered me 6 months of movies for half price about $10.60 per month. I took the deal but cancelled my Rialto sub.

[mistaTea]

I just got a call from a Sky rep who offered me 6 months of movies for half price about $10.60 per month. I took the deal but cancelled my Rialto sub.

They have started adding some Rialto content to NEON. Nice addition of content imo.