Thursday, November 05, 2009

Trafigura borrows $700,000,000; Sell! Sell!

We read here that "Trafigura has closed its latest syndicated revolving credit facility oversubscribed, raising $700m against an initial target of $505m as a result of strong support from institutions in Asia, according to the company.

The facility will refinance an existing one-year credit facility that closed in November 2008 at $200m. It has a tenor of 364 days, with two one-year extension options. It follows on from a $520m syndicated revolving credit facility of March 2009, which was mainly raised with European banks".

Wikipedia "Revolving credit is a type of credit that does not have a fixed number of payments, in contrast to installment credit. Examples of revolving credits used by consumers include credit cards. Corporate revolving credit facilities are typically used to provide liquidity for a company's day-to-day operations".

Syndicated just means a group of financiers.

What does this mean? I have not the faintest idea. All I do know is that Trafigura has had to fork out $198,000,000 for the clean up, and $ 50 000000 to the Abdjan victims' fund, which adds up to £248 million altogether. Let's round it up to $250 million to account for Messers Carter-Ruck's fees. Then they need to set aside a few millions in the event that the present Norwegian police investigation into the explosion of toxic waste leads eventually to the door of the courtroom. And then there is the murder charge brrought against Trafigura in Dutch courts by Greenpeace Netherlands.

Trafigura annual profit in 2008 = $440 million. So the Probo Koala lost them over half a year's profit.

36% of the money they have borrowed is going to go towards paying for the Probo Koala incident. Say 35%, because they did manage to sell the oil products for a profit of $19 million.

So it's not all bad for Trafigura.

But my advice, given free of charge, to all potential investors, is still "Sell Trafigura".

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