TeamTalk shares drop on accounting charge, extended debt facility

Tuesday 30th June 2015

TeamTalk shares dropped 6.3 percent after the telecommunications company warned net profit will be hit by a revaluation of interest rate swaps and said it had reduced the size of its debt facility after extending the credit line for three years.

Wellington-based TeamTalk has lowered the value of its fixed interest rate swap portfolio due to "wholesale interest rates falling significantly in the period" and expects that will have a negative non-cash affect on the bottom line, it said in a statement. The company affirmed second-half earnings before interest, tax, and depreciation will be "a bit ahead" of the $6 million reported in the first half. The shares fell 5 cents to 75 cents.

TeamTalk also refinanced its debt facility with Westpac Banking Corp, reducing the total size to $40 million and pushing out the maturity date until Dec. 31, 2018, "on broadly the same terms and conditions."

"Reflecting lower current debt levels, this facility still provides sufficient headroom and flexibility to pursue targeted investment in infrastructure expansion," it said.

The company cut its profit expectations when reporting its first-half earnings in February, with weak cash generation and higher than expected debt levels.

BusinessDesk.co.nz

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