Zip Co Limited Raises AUD42.8m in Capital
On 14 March 2019, Zip Co Limited (ZIP, Company) announced that it had successfully raised AUD42.8m in new capital. The Company is also raising up to AUD15m in additional capital via existing shareholders, subject to take-up and scaling.
The new capital will be used to strengthen ZIP’s balance sheet and accelerate growth. The capital raising also comes as the Company targets a lower cost of funding model. We expect the Company will call the zipMoney Trust 2017-1 Class B 1mBBSW+6.00% notes when they become due in May 2019.
Virgin Australia not impacted by 737 Max 8 grounding
Following the Ethiopian Airlines tragedy, the aircraft type involved (Boeing 737 Max 8) has been grounded across the globe. While this has had no immediate impact on Virgin Australia (as it does not currently operate this aircraft type), the company is expected to take delivery of its first (of 30) aircraft later this year.
We do not believe that any decision to either delay or cancel this order would have a material negative impact, since Virgin Australia’s aircraft fleet remains relatively young and we view the current aircraft renewal programme as an effort to lower cost by reducing the number of aircraft types operated by the group and take the benefit of better fuel efficiency.
Frontier Communications issue 1st lien notes due 2027
Frontier Communications issued USD1.65bn first lien notes due 2027 earmarked to repay some of the company’s bank debt due in 2021. At the same time, Frontier extended the maturity of its USD850m revolver facility by 2 years.
Following this transaction, Frontier has no debt maturity for the rest of 2019, with USD227m in 2020 and USD309m in 2021. Given the current run rate of about USD400m to USD500m of debt being repaid from cash flows, we view the new debt issuance as positive for the April 2020 and July 2021 notes. The situation remains challenging for the longer dated tranches given the USD2.7bn due in 2022.