24.05.2016

Coates debt on the block

Deutsche Bank is preparing to sell its $65 million worth of debt in Australia’s Coates Hire at an auction originally scheduled for today.

So far we have not heard if the auction - likely to involve hedge funds and other interested parties – even went ahead today, let alone who might have acquired the debt.

The debt is made up of Deutsche’s original $45 million tranche of debt plus a further $20 million it picked up when it acquired GE's debt portfolio last year. There are reports circulating that Coates may struggle to make principal payments on debt which becomes due by the end of June, however that has been countered by plans Coates is thought to be working on to make a $32 million pre-payment on the credit facility.

If this is true and Coates manages to remain within its current covenants for its latest results, Deutsche may find that the debt will not only be easier to sell, but will fetch a much better price than originally expected.