The Vocus Group Ltd (ASX: VOC) share price is storming higher on Thursday after the release of an announcement.
In morning trade the specialist fibre and network solutions provider’s shares are up 5.5% to $3.30.
What did Vocus announce?
Investors have been buying Vocus shares after it announced that it has both refinanced and extended the duration of its existing debt facilities and provided an update on its FY 2020 guidance.
Vocus’ new syndicated debt facility (comprising A$1,255 million and NZ$135 million) increases the duration of its debt to provide ongoing financial stability and flexibility.
And while the interest cover and gearing ratios are unchanged, management notes that the Net Leverage Ratio (Net Debt/EBITDA) covenant has been amended to a maximum of 3.25x. It will then reduce to 3x from 30 June 2021.
This mean Vocus is currently operating well within its covenant. At the end of December its Net Leverage Ratio stood at 2.8x and is expected to reduce at the end of FY 2020.
Vocus’ CEO and Managing Director, Kevin Russell, believes this refinancing and the reaffirming of its guidance is a testament to the strength of the company.
Mr Russell said: “Refinancing our debt and reaffirming guidance in the current market environment shows the underlying strength of Vocus’ business. The new loan facility is a strong platform that gives Vocus financial stability and flexibility as we enter the next phase of the company’s growth and business transformation.”
Guidance.
In FY 2020 Vocus expects its earnings before interest, tax, depreciation, and amortisation (EBITDA) to be in the range of $359 million to $369 million. This compares to FY 2019’s EBITDA of $360.1 million.
While today’s guidance is within its previous range, it has been narrowed to the low end. In February the company provided full year EBITDA guidance of $359 million to $379 million.
Management revealed that its core Vocus network services business has been doing the heavy lifting. It is expecting this key segment to deliver EBITDA growth of 10% this year.
Missed out on these gains? Then don’t miss out on these dirt cheap shares before they rebound…
NEW! 5 Cheap Stocks With Massive Upside Potential
Our experts at The Motley Fool have just released a FREE report detailing 5 shares you can buy now to take advantage of the much cheaper share prices on offer.
One is a diversified conglomerate trading over 30% off it’s all-time high, all while offering a fully franked dividend yield of over 3%…
Another is a former stock market darling that is one of Australia’s most popular and iconic businesses. Trading at a significant discount to its 52-week high, not only does this stock offer massive upside potential, but it also trades on an attractive fully franked dividend yield of almost 4%.
Plus, this free report highlights 3 more cheap bets that could position you to profit in 2020 and beyond.
Simply click here to scoop up your FREE copy and discover the names of all 5 cheap shares.
But you will have to hurry because the cheap share prices on offer today might not last for long.
As of 2/6/2020
More reading
- Why the Vocus share price can race ahead later this month
- Telstra share price down 21% since February. Is it now in the buy zone?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post Why this ASX 200 telco share is storming higher today appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/3cuvdEL
Leave a Reply