NRW Holdings (ASX:NWH) has provided a response to a recent media article relating to the capacity of the company to service its debts.
HIGHLIGHTS:
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Debt as at December 2019 included debt assumed on the acquisition of BGC Contracting, which completed on 9th December 2019.
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Debt levels were exaggerated by the addition of lease liabilities required to be included as debt (due to the recent introduction of AASB16 for the first time in the accounts) most of which relate to equipment which can be returned with minimal notice to the hire equipment provider with no cancellation cost.
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NRW has paid or has scheduled to pay circa $38M in line with its obligations in the March quarter funded from business cashflows, which have been entirely consistent with our business forecasts for the first quarter of 2020.
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Debt includes $154.6M financed by the original equipment providers, mostly for assets fully utilised on long-term mining projects. Around half of this debt (circa $87M), as advised in the BGC Contracting acquisition presentation “Client Option”, along with a further $30M of other asset finance debt is serviced through the terms and conditions of the contract with that client.
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Included in the “AASB16 debt” is circa $43M which relates to long term property leases where the short term payment obligations are relatively low (around $0.5M per month)
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The company expects cash balances as at the end of March to be in excess of $100M and has access to undrawn working capital facilities of $61M.
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NRW is in full compliance with its banking covenants.
NRW is continuing to support its clients and their projects. We have not experienced any material impact to our operations and equipment utilisation remains consistent with our activity expectations. We are working closely with clients to monitor the health and well being of site personnel and to ensure continuation of all operations and projects.
