Repay debts – Loro Dinapoli http://lorodinapoli.org/ Thu, 22 Sep 2022 08:59:11 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 http://lorodinapoli.org/wp-content/uploads/2021/07/icon-2021-07-06T154208.998-150x150.png Repay debts – Loro Dinapoli http://lorodinapoli.org/ 32 32 Migrant workers in Qatar in debt after being sent home before the start of the World Cup | Qatar http://lorodinapoli.org/migrant-workers-in-qatar-in-debt-after-being-sent-home-before-the-start-of-the-world-cup-qatar/ Thu, 22 Sep 2022 08:00:00 +0000 http://lorodinapoli.org/migrant-workers-in-qatar-in-debt-after-being-sent-home-before-the-start-of-the-world-cup-qatar/ JThousands of low-paid migrant workers in Qatar are being forced to return home ahead of the World Cup, leaving many fearful of ending up jobless, unable to support their families and deep in debt. In some cases, workers say they were fired before the end of their contract or without receiving their full salary or […]]]>

JThousands of low-paid migrant workers in Qatar are being forced to return home ahead of the World Cup, leaving many fearful of ending up jobless, unable to support their families and deep in debt.

In some cases, workers say they were fired before the end of their contract or without receiving their full salary or allowances.

The moves to send migrant workers back to their home countries ahead of the start of the FIFA tournament appear to be linked to a government circular, published last year and seen by the Guardian, which ordered some contractors to complete all work by mid-September and prepare a furlough plan for workers that “maximizes the reduction in the number of workers in the country” in the run-up to the World Cup.

On the wide promenade that runs along Doha Bay, a red clock in the shape of the Qatar World Cup logo counts down the days until the start of the tournament.

When the Guardian visits in the summer, hundreds of migrant workers dressed in blue overalls worked in the sweltering humidity to complete the redesign of a popular footbridge and the road running alongside it, known as the Corniche, which is expected to be a destination for thousands of tourists and football fans once the tournament begins.

The Guardian interviewed 25 workers employed on the Corniche. Most said they expected to be in Qatar for two years, but were sent home much sooner – in some cases after just 10 months. Many of those interviewed have now returned to their country.

Some workers who spoke to the Guardian said they had not worked long enough to repay the colossal sums – equivalent to four or five months’ basic salary in Qatar – that they had borrowed to pay recruitment agents in their home country to secure their employment in Qatar.

A clock on the Doha Corniche counts down the days until the start of the 2022 World Cup in Qatar. Photograph: Pete Pattisson/The Guardian

“We don’t want to go back. We are poor so we have to work,” said a Nepalese worker, who said he had been forced to pay the equivalent of almost £1,000 in illegal recruitment fees to get the job. “I haven’t refunded the fees yet. I will lose if I am fired.

Others were in a state of confusion, saying they were being sent home but were told they could be recalled after the World Cup. They now risk up to six months without pay while they wait to see if they can return.

All of the workers interviewed said they had no choice but to leave. “Many have already been sent and more are on the list. If your name is on the list, you have to go,” said one.

Many blamed the World Cup for the sudden end to their job. “Everyone will be fired because of the World Cup. It doesn’t matter how long you’ve been here,” one said. “What can I do? I am helpless.

Ansar Ali* said he paid an agent in India 100,000 rupees (£1,050) to secure his job. To pay the fees, he borrowed money at a high interest rate of 10%, but calculated that in two years he could pay off the debt and still earn enough to support his wife and family. his two sons.

But just 10 months after arriving in Qatar, he now expected to be sent home at any moment. “I don’t know when I will be sent, but I know I will have to leave. Two or three of my friends have already been notified,” he said.

“How am I going to survive when I come back? How am I going to repay my debt? he asked as he headed to a currency exchange office to exchange Qatari riyals for Indian rupees.

The workers interviewed by the Guardian are employed by UrbaCon Trading & Contracting Company (UCC) and InfraRoad, both subsidiaries of UCC Holding, on a Corniche modernization project.

Most of the workers affected appear to have been hired on short-term “project visas”, but say they were told they would be employed for at least two years. Letters from InfraRoad offering jobs to workers in August 2021 – after the government circular was issued – seem to support this claim.

The letters promise annual leave and round-trip airfare after two years, and require two months’ notice after two or more years of service.

Some workers blamed recruitment agents in their home countries for falsely promising them a two-year contract. Others said the responsibility rests with the contractor. “It’s the company’s fault because they made the deal with the agent,” one says.

Search by migrant-rights.organ organization that defends the rights of migrant workers in the Gulf, recently uncovered similar cases among workers returned to Nepal by a number of Qatar’s largest construction companies.

Some workers told migrant-rights.org that they had not received their full salary, overtime pay or severance pay. Others said they were sent home before their contracts ended.

One, who worked in Qatar for 12 years, including several World Cup stadiums, said: “How nice it would be for workers like me to watch the games in the stadiums we have. ourselves built. But who cares about us? There is no value for workers in this country. I feel like the World Cup is an event of and for the rich. »

May Romanos, Gulf Researcher at Amnesty International, said: “It is crucial that the Qatari government put workers’ rights at the forefront of any decision and ensure that the very people who made Qatar’s dream possible to host this World Cup do not face further abuses and violations as a result.

In a statement, a Qatari official said the government was not forcing companies to repatriate employees or downsize ahead of the World Cup.

“Any independent action taken by companies to reduce their workforce must be taken in accordance with the law and must not have a negative impact on the well-being of employees,” he said.

The statement also said that labor law allows employers and employees to terminate a contract before the end of its term as long as they respect the legal notice period. Foreign workers have the right to change jobs if their contract is terminated and legal procedures are in place if an employee does not receive their salary or allowances at the end of their contract, he added.

The Qatari government also said a fund to support workers, including reimbursing unpaid wages or benefits, paid out £152.5million last month.

“Qatar is committed to a fair and efficient labor system, and we appreciate the indispensable role of foreign workers in our economy and in society at large,” the official added.

UCC Holding did not respond to repeated requests for comment.

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Does Dätwyler Holding (VTX:DAE) have a healthy balance sheet? http://lorodinapoli.org/does-datwyler-holding-vtxdae-have-a-healthy-balance-sheet/ Tue, 20 Sep 2022 07:09:16 +0000 http://lorodinapoli.org/does-datwyler-holding-vtxdae-have-a-healthy-balance-sheet/ Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness can lead to […]]]>

Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness can lead to ruin. We note that Dätwyler Holding AG (VTX:DAE) has debt on its balance sheet. But does this debt worry shareholders?

When is debt dangerous?

Generally speaking, debt only becomes a real problem when a company cannot easily repay it, either by raising capital or with its own cash flow. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is when a company has to dilute shareholders at a cheap share price just to keep debt under control. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution in a business with the ability to reinvest at high rates of return. When we think about a company’s use of debt, we first look at cash and debt together.

Discover our latest analysis for Dätwyler Holding

What is Dätwyler Holding’s debt?

The image below, which you can click on for more details, shows that in June 2022, Dätwyler Holding had a debt of CHF 721.5 million, compared to CHF 203.1 million in one year. On the other hand, it has 93.0 million francs in cash, which results in a net debt of approximately 628.5 million francs.

SWX:DAE Debt to Equity History September 20, 2022

How healthy is Dätwyler Holding’s balance sheet?

We can see from the most recent balance sheet that Dätwyler Holding had liabilities of CHF 769.1 million maturing in one year and liabilities of CHF 170.7 million maturing beyond. In return, it had 93.0 million francs in cash and 284.2 million francs in receivables due within 12 months. Thus, its liabilities total 562.6 million francs more than the combination of its cash and short-term receivables.

While that might sound like a lot, it’s not too bad since Dätwyler Holding has a market capitalization of 2.75 billion francs and therefore could probably strengthen its balance sheet by raising capital if necessary. However, it is always worth taking a close look at its ability to repay debt.

We measure a company’s leverage against its earning power by looking at its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT ) covers its interest charge (interest coverage). The advantage of this approach is that we consider both the absolute amount of debt (with net debt to EBITDA) and the actual interest expense associated with that debt (with its interest coverage ratio ).

Dätwyler Holding’s net debt is 3.0 times its EBITDA, which represents significant but still reasonable leverage. But its EBIT was around 47.6 times its interest expense, implying that the company isn’t really paying a high cost to maintain that level of leverage. Even if the low cost turns out to be unsustainable, that’s a good sign. Unfortunately, Dätwyler Holding has seen its EBIT fall by 7.4% over the past twelve months. If earnings continue to fall, managing that debt will be as difficult as delivering hot soup on a unicycle. When analyzing debt levels, the balance sheet is the obvious starting point. But ultimately, the company’s future profitability will decide whether Dätwyler Holding can strengthen its balance sheet over time. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

Finally, while the taxman may love accounting profits, lenders only accept cash. We must therefore clearly examine whether this EBIT generates a corresponding free cash flow. Over the past three years, Dätwyler Holding’s free cash flow has been 45% of its EBIT, less than expected. This low cash conversion makes debt management more difficult.

Our point of view

Regarding the balance sheet, the most notable positive for Dätwyler Holding is the fact that it seems able to cover its interest charges with its EBIT with confidence. But the other factors we noted above weren’t so encouraging. For example, it looks like it has to struggle a bit to increase its EBIT. Considering all the factors mentioned above, we feel somewhat cautious about Dätwyler Holding’s use of debt. While we understand that debt can improve return on equity, we suggest shareholders keep a close eye on their level of debt, lest it increase. The balance sheet is clearly the area to focus on when analyzing debt. However, not all investment risks reside on the balance sheet, far from it. For example, we have identified 2 warning signs for Dätwyler Holding (1 is significant) which you should be aware of.

In the end, it’s often best to focus on companies that aren’t in debt. You can access our special list of these companies (all with a track record of earnings growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

Valuation is complex, but we help make it simple.

Find out if Dätwyler Holding is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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The Treasury denounces a plot to plunder public funds http://lorodinapoli.org/the-treasury-denounces-a-plot-to-plunder-public-funds/ Sun, 18 Sep 2022 16:03:36 +0000 http://lorodinapoli.org/the-treasury-denounces-a-plot-to-plunder-public-funds/ ZIMBABWE’s Treasury has revealed a calculated plot to plunder public funds through a bloated tender awarded by Parliament to two companies that charge astronomical prices for the supply of laptops and desktops , established The NewsHawks. After foiling the pillage bid, the Ministry of Finance canceled the tender and blacklisted the companies involved. Public procurement […]]]>

ZIMBABWE’s Treasury has revealed a calculated plot to plunder public funds through a bloated tender awarded by Parliament to two companies that charge astronomical prices for the supply of laptops and desktops , established The NewsHawks.

After foiling the pillage bid, the Ministry of Finance canceled the tender and blacklisted the companies involved.

Public procurement through tenders and contracts is central to the delivery of government services. These are large sums of money.

Parliament had awarded a tender to Blinart Investments P/L for the supply of 173 laptop computers at a cost of $1.6 million – or $9,264.48 each – and Mid-End Computers and Hardware P/ L for 79 desktops for $243,052 – or $3,076.61 each.

Blinart Investments has also been one of the suppliers to public institutions such as TelOne and the Municipality of Bindura.

In a September 14 letter to Clerk of Parliament Kennedy Chokuda, Permanent Secretary for Finance George Guvamatanga expresses deep concern over grossly overstated prices charged by the two companies for the supply of laptops and desktop computers.

“Treasury notes with concern that these vendors are charging $9,264.48 and $3,076.61 respectively for a laptop and desktop computer. These USD prices have been exorbitantly inflated far beyond the prevailing in the market and are therefore not acceptable,” Guvamatanga wrote in a letter copied to Finance Minister Mthuli Ncube, Chief Secretary to the President and Cabinet Misheck Sibanda, Auditor General Mildred Chiri, Chief Executive of the Zimbabwe Public Procurement Regulatory Authority, Clever Ruswa, and other senior government officials.

“The high prices notwithstanding, the award of the tender is in complete disregard of the Treasury minute dated August 3, 2022, directing departments to ensure value for money for government and, therefore, to streamline all procurement processes with a view to operating within the bounds of the willing buyer seller exchange rate.

“In this regard and to ensure value for money for the Government, in accordance with the Public Financial Management Act (Chapter 22:19) which empowers the Treasury to manage and control resources, the Treasury directs that this call for bids be canceled and affected vendors blacklisted from any future public procurement process.”

Blinart is one of the companies that buy foreign currencies from the official forex auction system. A 16-inch, 1TB Macbook pro, M1 pro, one of the high-end laptops on the market, retails for $3620 at Solution Center, one of the country’s authorized resellers for Apple products.

A 27-inch Retina IMAC, a powerful desktop computer primarily used by advertising and electronic media organizations due to its efficiency, costs $3,400 at the Solution Center.

The blacklisting of the two companies comes barely a month after the Treasury suspended payments to government contractors and service providers until a due diligence exercise is carried out in what is clearly admitted on the forces behind parallel market foreign exchange trading that have increased inflationary pressure in the economy.

Following the blacklisting of several companies in recent times, the Ministry of Finance has tightened the screws on suppliers and ministries by carrying out a validation exercise of current government contracts which are subject to optimization audits Resource.

As The NewsHawks recently reported, government service and supply providers – which include public works contractors and suppliers of goods and services – were destabilizing the foreign exchange market by offloading some of their staggering monthly payments, fueling inflation.

In August, Guvamatanga wrote to senior government officials, including Martin Rushwaya, Deputy Chief Secretary to the President and Cabinet, and Jonathan Wutawunashe, Secretary of the Civil Service Commission, among others, informing them that the Treasury had suspended funding payments submitted by July 31 when reviewing existing supply contracts.

Forward pricing by contractors and purchase of foreign exchange on the parallel market, according to Guvamatanga, have resulted in budget overruns that put pressure on the Treasury to finance expenditures that are not aligned with revenue inflows.

He said that in the future, government ministries, departments and agencies are required to seek approval from the Treasury on contract prices to ensure effective control over the use of public resources in accordance with the law. on the management of public finances.

In addition, all payment cycles submitted to the Treasury must have been reviewed and signed off by the accounting officer, ensuring value for money in procurement and confirming that the pricing framework is in line with government policy.

Sources say the government spends about Z$50 billion a month (about US$110 million at the official exchange rate) on suppliers. This money mainly ends up in the parallel market, fueling exchange rate volatility and inflation. The official exchange rate was US$1 = ZW$604 this week. The parallel market rate was US$1 = ZW$800.

However, the rate is falling due to a cocktail of restrictive monetary policy measures and market repression. Most public procurement of goods, works and services is financed with short-term public funds.

These services include the purchase of motor vehicles, information and communication technology systems and computers, fuel, furniture, food, travel, cleaning services, utilities, construction of roads and dams, alteration, demolition, installation or repair work carried out under contract and mostly paid for entirely by taxpayers’ money.

Sometimes these are funded by loans, donor funds and grants, but due to Zimbabwe’s international isolation and lack of external funding due to non-payment of debts and arrears, as well as financial restrictions (targeted sanctions), foreign funding is limited.

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Over 100 experts call on BlackRock to cancel Zambia’s debt http://lorodinapoli.org/over-100-experts-call-on-blackrock-to-cancel-zambias-debt/ Sat, 17 Sep 2022 00:00:47 +0000 http://lorodinapoli.org/over-100-experts-call-on-blackrock-to-cancel-zambias-debt/ More than 100 economists and development experts have called on BlackRock and other creditors to write off a significant chunk of Zambia’s debt. In a open letter released today, signatories – including Jeffrey Sachs, Jayati Ghosh, Philip Alston, Raj Patel and Cephas Lumina – are calling for large-scale debt restructuring, and for the UK and […]]]>

More than 100 economists and development experts have called on BlackRock and other creditors to write off a significant chunk of Zambia’s debt. In a open letter released today, signatories – including Jeffrey Sachs, Jayati Ghosh, Philip Alston, Raj Patel and Cephas Lumina – are calling for large-scale debt restructuring, and for the UK and New York to pass legislation ensuring that all private creditors comply with the G20
G20
The Group of Twenty (G20 or G-20) is a group made up of nineteen countries and the European Union whose ministers, central bank directors and heads of state meet regularly. It was created in 1999 after the series of financial crises of the 1990s. Its objective is to encourage international consultation on the principle of an expanded dialogue based on the growing economic importance of a certain number of countries. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States, the United Kingdom and the European Union (represented by the Presidents of the Council and of the European Central Bank).
the debt relief program.

Zambia is starting negotiations this month with private creditors to reduce the amount of its debt. On September 6, the The IMF has called for the cancellation of $8.4 billion in Zambia’s debt payments between 2022 and 2025.

In the letter, the experts say:

Due to the top interest rate
Interest rate
When A lends money to B, B repays the sum lent by A (the capital) together with an additional sum called interest, so that A has an interest in consenting to this financial transaction. Interest is determined by the interest rate, which can be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay one tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital. owed, or $5 million, for a total of $15 million. In the second year, he will repay 10% of the principal borrowed again, but the 5% now only applies to the remaining $90 million still owed, or $4.5 million, or a total of $14.5 million. millions of dollars. And so on, until the tenth year when he will repay the last $10 million, plus 5% of the remaining $10 million, or $0.5 million, for a total of $10.5 million. Over 10 years, the total amount repaid will be $127.5 million. The repayment of the capital is generally not made in equal installments. In the first years, the repayment mainly concerns interest, and the proportion of capital repaid increases over the years. In this case, if the repayments are stopped, the outstanding capital is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate less the rate of inflation. and the fact that Zambia’s bonds were trade
Market activities
trade

Buying and selling financial instruments such as stocks, futures, derivatives, options, and warrants in the hope of making a short-term profit.
well below face value since 2018, many bondholders stand to make huge profits at the expense of Zambian citizens and creditor countries if paid at face value. It is therefore imperative that BlackRock and other bondholders agree to fully commit to large-scale debt restructuring, including deep haircuts, in order to make Zambia’s debt sustainable.

They continue:

Zambian bonds are all governed by English law. In 2010, the UK Parliament passed groundbreaking legislation to enforce a previous debt relief program, the Heavily Indebted Poor Countries
Heavily Indebted Poor Countries
HIPC

In 1996, the IMF and the World Bank launched an initiative to reduce the debt burden of some 41 Heavily Indebted Poor Countries (HIPCs), whose total debt amounts to about 10% of Third World debt. The list includes 33 countries in sub-Saharan Africa.

The idea behind the initiative is as follows: a country on the HIPC list can start a PAS program for two times three years. At the end of the first stage (the first three years), IMF experts assess the “sustainability” of the country’s debt (based on medium-term projections of the country’s balance of payments and the present value ratio net (NPV) of debt to exports.
If the country’s debt is considered “unsustainable”, it is eligible for a second stage of reforms at the end of which its debt is made “sustainable” (that it gives itself the financial means necessary to repay the sums due). Three years after the start of the initiative, only four countries had been deemed eligible for very little debt relief (Uganda, Bolivia, Burkina Faso and Mozambique). Faced with these poor results and the Jubilee 2000 campaign (which was the subject of a petition of more than 17 million signatures during the G7 meeting in Cologne in June 1999), the G7 (group of the 7 more industrialized) and the international financial institutions have launched a strengthened initiative: the “sustainability” criteria have been reviewed (for example the value of the debt must only amount to 150% of export revenues instead of 200-250% as was the case before), the second stage of the reforms is no longer set in stone: a diligent student can anticipate and benefit from debt relief sooner, and thirdly, temporary relief can be granted after the first three years of reform.

At the same time, the IMF and the World Bank changed their vocabulary: their loans, hitherto called “enhanced structural adjustment facilities” (ESAF), were now called “growth and poverty reduction facilities” (GPRF) while that “structural adjustment policies” are now called “Poverty Reduction Strategy Paper”. This document is drafted by the requesting country with the assistance of the IMF and the World Bank and the participation of representatives of civil society.
This reinforced initiative was widely publicized: the international media announced a 90%, even 100% cancellation after the Euro-African summit in Cairo (April 2000). Yet, on closer inspection, the HIPC Initiative turns out to be yet another deceptive maneuver that suggests but in no way implements debt cancellation.

List of 42 Heavily Indebted Poor Countries: Angola, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea – Bissau, Guyana, Honduras, Kenya, Laos, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Vietnam, Zambia. initiative, on claims governed by English law. The UK should do the same to ensure that all private creditors comply with the terms of the G20 Common Framework debt restructurings. New York – the other key jurisdiction for sovereign debt – should do the same.

The signatories conclude by saying:

In times of global crisis, it is economically inefficient and morally reprehensible for high interest
Interest
Amount paid as remuneration for an investment or received by a lender. Interest is calculated on the amount of capital invested or borrowed, the duration of the operation and the rate that has been set.
debts to be paid to private lenders, while governments reduced support for their own people. The world urgently needs a strengthened program to deliver debt restructuring for countries and people in need
.”

Zambia first requested debt relief through the G20 Common Framework for Debt Restructuring in February 2021. No debt has yet been restructured, but in July 2022 government lenders including China agreed in principle conclude a restructuring in accordance with the IMF
IMF
International Monetary Fund

Together with the World Bank, the IMF was founded on the day the Bretton Woods agreements were signed. Its first mission was to support the new standard exchange rate system.

When the Bretton Woods fixed rate system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman of world capital: it acts as policeman when it applies its structural adjustment policies and as a firefighter when he intervenes. to help governments at risk of not repaying their debt.

As with the World Bank, a weighted voting system works: according to the amount paid as contribution by each member state. 85% of the votes are needed to modify the IMF Charter (meaning that the USA with 17.68% of the votes has a de facto right of veto on any change).

The institution is dominated by five countries: the United States (16.74%), Japan (6.23%), Germany (5.81%), France (4.29%) and the Kingdom United (4.29%) .
The other 183 member countries are divided into country-led groups. The most important (6.57% of the vote) is led by Belgium. The smallest group of countries (1.55% of the vote) is led by Gabon and includes African countries.

http://imf.org’s assessment of how much debt relief is needed. Zambia is now seeking to strike a deal with private lenders, which is also in line with the IMF’s assessment.

BlackRock is the largest owner of Zambian bonds, holding $220 million. Debt justice has valued that BlackRock could gain 110% profit
Profit
The positive gain generated by the activity of a company. Net profit is profit after tax. Distributable profit is the part of net profit that can be distributed to shareholders.
for himself and his clients of Zambia’s debt if fully paid. The Zambian Civil Society Debt Alliance, Debt Justice, Global Justice Now, Action for Southern Africa (ACTSA), Christian Aid, Cafod and Jubilee Scotland are campaigning for BlackRock and other private lenders to cancel the debt.

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Debt Consolidation Loan vs Balance Transfer: Which is Right for You? http://lorodinapoli.org/debt-consolidation-loan-vs-balance-transfer-which-is-right-for-you/ Wed, 14 Sep 2022 16:03:59 +0000 http://lorodinapoli.org/debt-consolidation-loan-vs-balance-transfer-which-is-right-for-you/ Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own. A debt consolidation loan and balance transfer […]]]>

Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own.

A debt consolidation loan and balance transfer can help you consolidate high-interest debt. Learn how they compare. (Shutterstock)

Debt consolidation consolidates several debts into a single account. It can help you save money, lower your monthly payments, and streamline your payment process. Although you can consolidate your debt in several ways, debt consolidation loans and balance transfers are the most common.

Here’s what you need to know about each of them in order to determine the ideal debt consolidation strategy for your particular situation.

If you need a loan to consolidate high-interest debt, Credible lets you view your prequalified personal loan rates from various lenders, all in one place.

Debt Consolidation Loan vs Balance Transfer: What’s the Difference?

Debt consolidation loans and balance transfer credit cards are credit products you can use to consolidate other, higher-interest debt. Here’s an overview of how each works.

What is a debt consolidation loan?

A debt consolidation loan is a type of unsecured personal loan. If you subscribe to one, you will receive a lump sum upfront. Then you will repay what you borrow in fixed monthly payments over a set period of time. Although loan amounts vary, they can range from $1,000 to $100,000.

If you have different types of debt that can take years to pay off, a debt consolidation loan is worth considering.

UNSECURED LOANS: KNOW ALL

What is a balance transfer credit card?

Balance transfer credit cards allow you to transfer balances from your current maps to a new card, usually with a 0% APR introductory period of six to 18 months. If you pay off all your debts before the end of this introductory period, you can save a lot on interest. But keep in mind that once the period is over, you’ll start earning interest on the remaining balance on the card, and credit cards can have high interest rates.

If you have a lot of high interest credit card debt and you can pay it off during the introductory period, a balance transfer credit card might make sense.

Advantages and disadvantages of a debt consolidation loan

Before choosing a debt consolidation loan, consider these pros and cons:

Advantages

Visit Credible for compare personal loan rates from various lenders, without affecting your credit score.

The inconvenients

  • If you don’t have the best credit, you may find it difficult to get an interest rate lower than what you are currently paying.
  • Some lenders charge origination fees, prepayment penalties, and other fees when you take out a debt consolidation loan.
  • There is no 0% APR introductory period like some credit card offers.
  • If you don’t make your payments on time, every time, your credit can take a hit.

WHERE TO GET A $5,000 LOAN

Advantages and disadvantages of a balance transfer

Here are some pros and cons to think about before deciding on a balance transfer:

Advantages

  • You can benefit from a 0% APR introductory period, which can save you hundreds or even thousands of dollars in interest.
  • Some cards offer rewards, such as cash back and travel points.
  • Opening a new card can lower your credit utilization ratio (the amount of credit you use compared to the amount of available credit you have) and, therefore, improve your credit score.

The inconvenients

  • If you don’t pay off your debt before the end of the 0% APR period, you could face high interest charges.
  • Some cards charge a balance transfer fee of 3% to 5% of the amount you transfer.
  • You may not qualify for a balance transfer credit card unless you have good credit.

What to consider when consolidating debt

When comparing a debt consolidation loan and a balance transfer, consider the following factors:

Where to get a debt consolidation loan

You can get a debt consolidation loan from a bank, credit union, or online lender. While banks and credit unions tend to offer competitive rates, they generally have stricter requirements than online lenders. Also, you must join a credit union before taking out a loan from it.

If your credit score is preventing you from getting approved for a debt consolidation loan, you may want to apply with a co-signer who has good credit or take the time to improve your credit before to make your request.

If you’re ready to apply for a debt consolidation loan, Credible makes it quick and easy compare personal loan rates to find the one that suits your needs.

Where to get a balance transfer card

Many banks and credit card companies offer balance transfer credit cards. If you’re having trouble qualifying, check your credit reports and dispute any errors. Also focus on making your payments on time and do your best to pay off some of your credit card debt to improve your credit utilization.

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Mastering Student Loan Debt http://lorodinapoli.org/mastering-student-loan-debt/ Sat, 10 Sep 2022 15:30:00 +0000 http://lorodinapoli.org/mastering-student-loan-debt/ RALEIGH, NC — Much is still being said about President Joe Biden’s plan to eliminate massive amounts of student loan debt for tens of millions of Americans. What do you want to know Economic study estimates $10,000 forgiveness per borrower would eliminate $321 billion in student loan debt Student loan repayments were scheduled to resume […]]]>

RALEIGH, NC — Much is still being said about President Joe Biden’s plan to eliminate massive amounts of student loan debt for tens of millions of Americans.


What do you want to know

  • Economic study estimates $10,000 forgiveness per borrower would eliminate $321 billion in student loan debt
  • Student loan repayments were scheduled to resume on August 31, but President Joe Biden extended the repayment freeze until December 31.
  • Financial expert Alex Sutherland says saving early – even a small amount – is crucial because it allows money to grow through compound interest

Biden announced a plan to cancel up to $20,000 in federal debt for most borrowers while extending the repayment freeze.

Raleigh financial expert Alex Sutherland of LifePlan Group explained what this means for borrowers and how to maximize the opportunity.

Q: Who will be eligible for loan forgiveness?

  • In August, President Joe Biden announced his plan to cancel student loans. Americans with an annual income of $125,000 or less would have $10,000 in federal student loans forgiven.
  • Those with a Pell grant, which is usually given to low-income students, would have $20,000 of debt forgiven.
  • This proposal comes after months of debate over how to solve the student loan crisis.
  • More than 40 million Americans are struggling under the strain of student debt, collectively owing $1.7 trillion for their education.
  • Those with student loan debt often have to put off major financial decisions, like buying a home or saving for retirement.
  • Student loans are not just a problem of young people. Older Americans are going into debt even faster than their younger counterparts. 2.4 million Americans age 62 and older owe $98 billion in student loans.

Q: How much will it cost to cancel a student loan?

  • An economic study estimates that a forgiveness of $10,000 per borrower would eliminate $321 billion in student loan debt.
  • Depending on how the details of the program are implemented, the proposed student loan forgiveness plan would cost the government more than $400 billion.
  • During Biden’s tenure, existing remission programs have already forgiven about $32 billion in student debt.

Q: When will the refund freeze end?

  • Loan repayments were due to resume for millions of borrowers after August 31. However, Biden extended the reimbursement freeze until December 31.
  • Although the freeze is still in place, those in the repayment phase of their loan are not required to make regular payments and their balance will not accrue interest during this period.
  • The freeze only applies to federal loans, which represent 92% of outstanding student debt.
  • When payments resume, the Department for Education has proposed a maximum payment of 5% of a borrower’s Discretionary Income, reduced from the current maximum of 10%, which applies to any borrower using a repayment plan based on income.
  • Under these new regulations, borrowers making regular monthly student loan payments will have their outstanding monthly interest waived.

Q: Should borrowers continue to make payments during the freeze?

  • Biden has signaled this will be the last extension, meaning borrowers should prepare to resume payments in early 2023.
  • It’s important to plan ahead and use smart financial strategies to make sure you don’t fall behind when repayment begins.

Prepare for reimbursement

  • If you can, keep paying off your student loan. If you get into the habit now, you can prepare your budget so you won’t be caught off guard when payments resume.
  • You don’t want to be hit with late payment fees, or worse, be in default. You can set up a direct debit to avoid missing a payment. Many repairers will give you a small interest rate reduction for setting up autopay.
  • If you are in financial difficulty, consider taking advantage of the freeze.
  • A calculator can help you get a realistic idea of ​​how much student debt you’re carrying and how long it will take to pay it off.

Build up your savings

  • It’s tempting to avoid saving money to pay off your loans, but graduates will regret it later.
  • Saving early — even if it’s just a small amount — is crucial, as it allows the money to grow through compound interest.
  • We recommend that you save at least 10% of your salary in your employer-sponsored 401(k) plan. If you can’t handle that, consider contributing at least enough to get the company match.
  • Hopefully, student loan forgiveness will give you a head start in freeing yourself from debt. Once you’ve reached this goal, be sure to increase your savings for retirement.
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Citi entitled to repay mispayment of Revlon loan, appeals court says http://lorodinapoli.org/citi-entitled-to-repay-mispayment-of-revlon-loan-appeals-court-says/ Thu, 08 Sep 2022 21:00:45 +0000 http://lorodinapoli.org/citi-entitled-to-repay-mispayment-of-revlon-loan-appeals-court-says/ An appeals court ruled Sept. 8 that Citibank was entitled to repay $500 million it mistakenly sent to Revlon lenders in August 2020. At the time, the bank intended to make an interest payment on the company’s outstanding leveraged loan of $7.8 million, but due to a In error, it transferred approximately $900 million to […]]]>

An appeals court ruled Sept. 8 that Citibank was entitled to repay $500 million it mistakenly sent to Revlon lenders in August 2020.

At the time, the bank intended to make an interest payment on the company’s outstanding leveraged loan of $7.8 million, but due to a In error, it transferred approximately $900 million to the lenders in repayment of all principal and interest owed under the company’s 2016 term loan. due in 2023. Citi quickly demanded the return of the funds paid in error, and while most lenders complied, others did not, retaining about $500 million of the mistaken payment.

The lenders, representing 126 creditors, who have refused to return payments are Brigade Capital, HPS Investment Partners, Symphony Asset Management, Bardin Hill, Greywolf, Allstate, Medalist Partners, Tall Tree Investment Management and New Generation Advisors.

Citibank sued the lenders in federal court in Manhattan, but in February 2021 the court ruled in favor of the lenders, citing a rule known as a “release for value” that provides that monies mistakenly paid to a lender need not be returned provided the debt owed was valid, the lender did nothing wrong to cause the payment to be wrong and the lender was unaware that the payment was wrong.

In overturning this decision on appeal, however, the Court of Appeals for the Second Circuit found that the principle of acquittal by value did not apply because Revlon’s lenders had received “implied notice” that the payments made to them were erroneous (the trial court found that the release-for-value rule required that the lenders be actually notified that the payments were erroneous). The appeals court found that the principal payment was sufficiently unusual, given all the circumstances at the time, including Revlon’s contentious efforts to restructure the 2016 loan, that reasonable lenders should have asked whether a mistake had been made.

The Court of Appeal also found that at the time of the erroneous payment, the principal of the loan had not yet been due for three years and that for the purposes of the “release for value” rule, the amounts were not then not due to lenders.

The effect of the ruling on Revlon’s Chapter 11 case was not immediately clear, although at first glance it would appear, at a minimum, to add potentially disgruntled new parties to the bankruptcy proceedings, to namely the lenders under the 2016 loan who had refused to return Citi’s funds, which could confuse negotiations of the reorganization plan.

The decision, however, does not appear to affect the total amount of Revlon’s debts. Last month, Citi filed a Chapter 11 lawsuit against Revlon asking for a definitive statement that Citi was “fairly subrogated” in the rights of lenders it had repaid in error. Put simply, Citi is seeking a bankruptcy court ruling that Revlon owes the bank money that Citi accidentally repaid to the company’s term lenders that has not been returned.

Citi said it was compelled to file the contradictory action because, although there was clearly no legal or factual basis for denying Citi’s subrogation rights, “it became abundantly clear that the Revlon Group and other constituencies have refused to recognize Citibank’s subrogation rights in an attempt to gain bargaining power in Chapter 11 cases.”

]]> Double pain for Pakistan drowned in floods and debts http://lorodinapoli.org/double-pain-for-pakistan-drowned-in-floods-and-debts/ Mon, 05 Sep 2022 05:55:40 +0000 http://lorodinapoli.org/double-pain-for-pakistan-drowned-in-floods-and-debts/ It is worth mentioning that Pakistan is one of 52 countries facing severe debt crisis [2]. The most critical issue facing the country’s economy is repaying and servicing its external debt, some $38 billion to IMF IMFInternational Monetary Fund Together with the World Bank, the IMF was founded on the day the Bretton Woods agreements […]]]>

It is worth mentioning that Pakistan is one of 52 countries facing severe debt crisis [2]. The most critical issue facing the country’s economy is repaying and servicing its external debt, some $38 billion to IMF
IMF
International Monetary Fund

Together with the World Bank, the IMF was founded on the day the Bretton Woods agreements were signed. Its first mission was to support the new standard exchange rate system.

When the Bretton Woods fixed rate system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman of world capital: it acts as policeman when it applies its structural adjustment policies and as a firefighter when he intervenes. to help governments at risk of not repaying their debt.

As with the World Bank, a weighted voting system works: according to the amount paid as contribution by each member state. 85% of the votes are needed to modify the IMF Charter (meaning that the USA with 17.68% of the votes has a de facto right of veto on any change).

The institution is dominated by five countries: the United States (16.74%), Japan (6.23%), Germany (5.81%), France (4.29%) and the Kingdom United (4.29%) .
The other 183 member countries are divided into country-led groups. The most important (6.57% of the vote) is led by Belgium. The smallest group of countries (1.55% of the vote) is led by Gabon and includes African countries.

http://imf.org, world Bank
world Bank
BM

The World Bank was founded within the framework of the new international monetary system set up in Bretton Woods in 1944. Its capital is made up of contributions from member states and loans on the international money markets. It has funded public and private projects in Third World and Eastern European countries.

It is made up of several closely associated institutions, including:

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which grants loans in productive sectors such as agriculture or energy;

2. The International Development Association (IDA, 159 members in 1997), which grants long-term loans (35-40 years) to the least developed countries at very low interest rates (1%);

3. The International Finance Corporation (IFC), which provides both loan and equity financing to business enterprises in developing countries.

As Third World debt worsens, the World Bank (along with the IMF) tends to adopt a macroeconomic perspective. For example, it applies adjustment policies intended to balance the payments of heavily indebted countries. The World Bank advises countries undergoing IMF therapy on issues such as reducing budget deficits, rounding up savings, bringing foreign investors within their borders, or freedom of prices and exchange rates.

and other financial institutions, including loans from Chinese banks by the end of the current fiscal year.

The International Monetary Fund (IMF) has projected Pakistan’s external debt to reach $138.568 billion in 2022-23 from $129.574 billion in 2021-22. [3]. The country had to pay $15.071 billion in external debt service in FY22, compared to $13.424 billion in the previous fiscal year. The breakdown shows that $12.093 billion was paid in principal repayments and $2.978 billion in interest
Interest
Amount paid as remuneration for an investment or received by a lender. Interest is calculated on the amount of capital invested or borrowed, the duration of the operation and the rate that has been set.
Payments. Additionally, Pakistan has already paid about $65 million in IMF surcharges from 2018 to 2020 and is likely to pay another $392 million from 2021 to 2030 on top of its bloated debt repayments. claimant creditors debt servicing
Debt servicing
The sum of interest and amortization of the capital borrowed.
of $38 billion this year puts millions of lives at risk.

Constrained by limited options, Pakistan is considering reapplying for an emergency loan from the IMF as preliminary estimates suggest devastating floods may have caused nearly $10 billion in losses and the rate of economic growth could slow down to just 2% in the current exercise [4]. It is equally important to mention that in April 2020, the IMF approved $1.4 billion in emergency financing for Pakistan under the Rapid Financing Instrument (RFI) to help the country coping with the consequences of the Covid-19 pandemic.

While emergency aid is essential in the situation, the point is what is at stake in Pakistan. Last month, on August 22, the cash-strapped country was forced to accept the IMF’s deal to revive a bailout loan under the Extended Financing Facility (EFF) program worth $4 .2 billion. [5] loaded with very strict conditions of a huge increase in the prices of oil, gas, electricity and drastic cuts in social spending, etc., crushing the millions of the working class. Not to mention that over the next 12 months, Pakistan will need at least $41 billion to repay debt as inflation
Inflation
The cumulative rise in prices as a whole (for example a rise in the price of oil, leading eventually to a rise in wages, then to a rise in other prices, etc.). Inflation involves a fall in the value of money because, over time, larger sums are needed to purchase particular items. This is why business-oriented policies seek to contain inflation.
in Pakistan is growing by 26%, the second highest rate in Asia.

Although the most recent flood is different in nature from that of 2010 – the latter was a flash flood while the current is a river flood – in both cases it can be said that the damage caused by the two disasters is the result of climate change. change and misguided development policies across Pakistan. Over the past 17 years, Pakistan has experienced three major crises – before the current one. Although the nature and scale of these crises were different, two of them were caused by natural hazards — the 2005 earthquake, which affected 3.5 million people, and the 2010 floods which affected more than 20 million people.

Another vital aspect of this ongoing catastrophe is the horrific impact of climate change on Pakistan. It produces less than 1% of global carbon emissions and yet it is one of the countries bearing the worst consequences of the climate crisis. Over the past 20 years, it has consistently ranked in the Global Climate Risk Index among the ten most vulnerable countries. The climate catastrophe affecting millions of people in Pakistan has not yet worsened. Today, its floods are caused by torrential rains 400 to 500 percent above normal and melting glaciers. In the future, it will be water scarcity that will pose a greater risk to the survival of millions of people.

The multiple COVID crises, its economic impacts, worsening pre-pandemic hardship and escalating climate-induced disaster are already more than enough reason for Pakistan’s debt cancellation. The devastating floods in the country have made it even more urgent. It would be utterly inhumane for lenders – public and private – not to respond to this demand.

In such circumstances, immediate outright debt cancellation is a minimum requirement since Pakistan is no longer able to repay its loans and these floods have worsened the state of the country’s economy. In the current context, given the UN’s “state of necessity” rule, Pakistan must be allowed to use available funds to meet the life-saving needs of 33 million flood-affected people and not not repay its debt, without being sued for non-payment. its commitments.

Last but not least, rich nations must respect their just to share
To share
A unit of ownership in a company or financial asset, representing a portion of the total share capital. Its owner (a shareholder) has the right to receive an equal distribution of all distributed profits (a dividend) and to attend shareholder meetings.
global climate actions, to stop the catastrophic climate change of which Pakistan is the worst victim. It is high time to remind them of their climate finance obligations – to address loss and damage such as the people of Pakistan are currently experiencing.

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Orion Energy Systems needs to improve its SG&A spending http://lorodinapoli.org/orion-energy-systems-needs-to-improve-its-sga-spending/ Fri, 02 Sep 2022 21:54:00 +0000 http://lorodinapoli.org/orion-energy-systems-needs-to-improve-its-sga-spending/ Bat Lari/iStock via Getty Images Orion Energy Systems (NASDAQ: OESX) is an American manufacturer of LED systems that offers complete LED retrofit solutions for B2B customers seeking to improve their energy efficiency. The business has been operationally unprofitable for most of the last decade, including start-up and abandonment of a solar equipment rental segment. Between […]]]>

Bat Lari/iStock via Getty Images

Orion Energy Systems (NASDAQ: OESX) is an American manufacturer of LED systems that offers complete LED retrofit solutions for B2B customers seeking to improve their energy efficiency.

The business has been operationally unprofitable for most of the last decade, including start-up and abandonment of a solar equipment rental segment. Between 2019 and 2022, she landed huge contracts with a single client that allowed her to reach between $6 million and $10 million in net revenue. While those contracts are slowing down because the company is back in unprofitable territory.

In my opinion, the continued unprofitability of OESX is caused by fixed SG&A expenses that cannot be justified in a business that is constantly losing money. In turn, I assume that SG&A spending is not improved because there is no strong shareholder to lead this change.

On the positive side, OESX has used recent earnings to pay off all of its financial debt. He now has no debt and $10 million in cash, as of 1Q23 (June 2022).

Note: Unless otherwise stated, all information was obtained from OESX filings with the SEC.

Competitive analysis

OESX deals with the manufacture, design, installation and maintenance of LED systems. It mainly does this in retail, office, industrial or outdoor settings for B2B customers directly. It also sells indirectly through commercial agents and ESCO.

The company offers a complete solution, while it assesses the customer’s facilities and designs an improvement plan to reduce energy costs. He can then implement this plan in a short period of time, with minimal inconvenience to the client, in multiple establishments.

Although OESX also offers specialty LED equipment as separate products and product revenue accounts for nearly 80% of revenue, it is difficult to separate service and product revenue. Since OESX sells a significant portion directly to customers and equipment is used in facility improvement projects, it is likely the service side that is driving product demand.

Let’s analyze the competitive dynamics of this market.

First, on the manufacturing operation alone. LED equipment is a relatively commoditized product and an industry with much larger players than OESX. The company has a relatively small manufacturing facility in Wisconsin, which likely makes it less competitive than larger players operating in cheaper manufacturing markets. From a Porter’s point of view, it’s not a big market.

The design and implementation of LED systems is somewhat more protected from cheaper overseas competitors as it is a non-negotiable service, meaning it must be done locally. On the negative side, design and implementation is also not a very attractive market.

D&I is a relatively undifferentiated service, which many companies can provide with insignificant differences. OESX argues that not all companies are capable of providing large enterprises with implementation in multiple installations, but I doubt there aren’t other competitors with these capabilities.

The service is also capped by the gains generated by energy efficiency. Customers compare the cost of implementing a new system with the savings generated over several months/years. Having a price cap is terrible for the competition. Along the same lines, OESX sells to businesses, which is always worse than selling to consumers, because businesses compare alternatives better.

In terms of sourcing, OESX benefits from having a standardized LED market to source from. The fact that he mostly uses his own manufactures is interesting, although we’ll get to that later. Employees participating in the D&I component are qualified electricians and engineers or energy efficiency analysts. These can be difficult and expensive to find.

OESX faces competition from other companies providing the same service, but also from energy service companies, or ESCOs, which combine design and implementation with financing or performance payments. ESCOs sometimes fund energy efficiency improvements (including lighting) and are reimbursed on energy savings. In other situations, their remuneration is linked to energy savings.

In terms of channels, OESX primarily sells directly to end customers. Its services segment, which represents the direct sale of solutions, accounts for 75% of revenue. The rest comes from independent sales agents or ESCO who compete with OESX in the system design segment but purchase OESX’s LED equipment.

Operational efficiency

The result of this dynamic? OESX revenues have been stagnant or declining at best for most of the past decade. According to company’s FY22 10-K report.

Chart
OESX revenue (TTM) given by Y-Charts

Going down the income statement, two things are interesting. First, gross margins are relatively stable, despite declining and then rapidly increasing revenues. Second, operating margins are consistently negative.

Chart
OESX gross profit margin given by Y-Charts

The second point is a key aspect of OESX’s underperformance over the past decade. SG&A expenses have been pegged at near or above $20 million per year for more than 15 years, despite the company not being profitable and gross profits declining with declining revenues.

Chart
General and administrative costs of OESX (MTT) given by Y-Charts

This signals a problem because it shows that OESX was unable or unwilling to implement an efficiency program that reduced SG&A expenses to a level consistent with the gross profits it was able to generate. generate. In my opinion, a business not being able to grow is not a problem, as long as it can make a profit in any market it has. OESX has had almost twelve years of operating losses, but has never been able to sufficiently reduce SG&A expenses.

Another interesting aspect of the company’s accounting is that it has always spent less on capital renovations than it spends on depreciation. It also has relatively low fixed assets for a heavy manufacturing company, with just $35 million gross and $11 million net.

Chart
Basic table given by Y-Charts

Recent Developments and Financial Strength

Due to the significant SG&A leverage of OESX, the significant increase in revenue in fiscal years 20, 21 and 22, combined with consistent gross margins, resulted in a significant increase in profits.

Earnings were also boosted by losses carried forward from OESX and a reversal of tax allowances. On a normal tax basis, considering the US income tax rate of 21% plus Wisconsin’s state income tax rate of 5%, OESX would have generated approximately $10, $5, and $6 million dollars of net income in fiscal years 20, 21 and 22 respectively.

OESX used $10 million of these profits to pay off its financial debts and also accumulated cash. This is positive for the company, which now has no financial debt, an unused credit facility of $25 million and $10 million in cash. at 1Q23.

OESX also acquired a lighting installation and maintenance company called Stay-Lite Lighting. SLL has its operations concentrated in the Northeast and Midwest of the United States. OESX provided very little separate information for SLL, only that between January and March 2022 the company generated $2.7 million in sales and $0.2 million in operating profit. This is very little information, but the price of 4 million dollars paid for SLL does not seem exaggerated. OESX only recorded $600,000 of goodwill for this acquisition.

The problem is that large OESX contracts, with a single client, which accounted for 74%, 56% and 49% of revenues in FY20, 21 and 22, are slowing down. As you can see in the chart below, OESX’s revenue has steadily declined over the past three quarters. The company was unable to obtain new contracts, and on its Announcement of 1Q23 resultsshe mentions that her clients are slowing down their investments due to the more complicated economic context.

Condensed financial figures from OESX for the last four quarters reported, showing a steady decline in revenue and profit

Condensed OESX financials for last four quarters released (OESX Report 1Q23 10-Q)

OESX needs to improve its SG&A

The results for the last quarter relate to the situation observed for most of the last decade. The main problem with OESX is that it cannot operate under a certain income level because its SG&A expenses are too high.

If the business can only be profitable at an extraordinary level of income for a decade, it is not a good investment.

I guess OESX hasn’t been able to improve its SG&A spend because it doesn’t have a major shareholder. As of 2022, according to the company’s latest proxy statement, it has only two significant shareholders, one with an 11% stake and the other with 6%. If we go back to Proxy Statement 2016, the situation is not very different, the first shareholder holding 15% of the capital. back to proxy statement 2011 and the largest shareholder was the company’s founder with 9.5%.

A strong shareholder is necessary to carry out a strategy of improving efficiency, which is probably difficult and may harm people’s interests. OESX operates in a small town of 30,000 people in Wisconsin.

Of course, this is speculation, it may very well be that OESX cannot generate revenue with lower levels of SG&A. In this case, the company is simply not profitable unless it receives an exceptional contract.

Either way, I don’t consider OESX a buy for an individual investor. This can be interesting for an activist fund, of course by doing much more in-depth due diligence.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these actions.

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Sri Lanka and IMF reach preliminary agreement on $2.9 billion loan http://lorodinapoli.org/sri-lanka-and-imf-reach-preliminary-agreement-on-2-9-billion-loan/ Thu, 01 Sep 2022 05:51:41 +0000 http://lorodinapoli.org/sri-lanka-and-imf-reach-preliminary-agreement-on-2-9-billion-loan/ Protesters seen here gathering outside the presidential secretariat in Colombo a week ago have achieved their goal, with lawmakers soon to elect a new president to replace Gotabaya Rajapaksa, who fled the country and resigned as president. Arun Sankar | AFP | Getty Images The International Monetary Fund has agreed on a preliminary basis to […]]]>

Protesters seen here gathering outside the presidential secretariat in Colombo a week ago have achieved their goal, with lawmakers soon to elect a new president to replace Gotabaya Rajapaksa, who fled the country and resigned as president.

Arun Sankar | AFP | Getty Images

The International Monetary Fund has agreed on a preliminary basis to extend $2.9 billion loan over 48 months in Sri Lanka to help restore economic stability in the crisis-hit South Asian country.

The loan will be granted under the aegis of the IMF Extended Fund Facility, which helps countries deal with balance of payments or cash flow problems. It will only be disbursed after satisfactory debt restructuring, including debt relief agreements, between the Sri Lankan authorities and the country’s creditors.

The program also includes reforms for Sri Lanka to reduce corruption and increase financial transparency.

“Sri Lanka faces an acute crisis. Vulnerabilities have increased due to insufficient external reserves and unsustainable public debt dynamics,” Peter Breuer and Masahiro Nozak of the IMF said in a press release. who led a mission to Sri Lanka last week. Release.

“April’s debt moratorium caused Sri Lanka to default on its external obligations, and an extremely low level of foreign exchange reserves hampered the importation of essential goods, including fuel, further hampering economic activity. “.

The IMF said Sri Lanka’s economy is expected to contract by 8.7% this year as inflation tops 60%.

“The impact has been borne disproportionately by the poor and vulnerable,” said the IMF’s Breuer and Nozak, adding that the funds “are aimed at stabilizing the economy, protecting the livelihoods of the Sri Lankan people and to prepare the ground for economic recovery and the promotion of sustainable development”. and inclusive growth.

The IMF said the new loan is subject to IMF management and board approval. He also said the loan can only be granted if the Sri Lankan authorities have carried out satisfactory debt restructuring, including debt relief agreements with external creditors.

The IMF must therefore receive assurances of financing from Sri Lanka’s official creditors in order for agreements to be concluded and for Sri Lanka to be able to repay its debts. The IMF must also be satisfied that the local authorities have made good faith efforts to reach a collaborative agreement with all other private creditors.

Sri Lanka has over $50 billion in foreign debt owed to countries like Japan and China as well as the World Bank, according to the central bank of Sri Lanka.

At a press conference on Thursday, Breuer said the preliminary agreement is a signal from the Sri Lankan authorities that they are committed to comprehensive reforms that would be monitored by the IMF.

“This is a credible device to show creditors that Sri Lanka is committed to reform,” Breuer said.

“He assures creditors that he will restore the ability to pay and undertakes to do so, at the international committee.”

Sri Lankan stock exchange president predicts four to five months of additional hardship

Breuer urged creditors to work with Sri Lanka on negotiations because delays in talks can block the disbursement of IMF funds and deepen the crisis in the island nation.

If approved by the IMF, the funds from the first batch will be released upon approval, with subsequent disbursements being made during periods of the IMF’s EEF program, Nozak said. A review will precede each round of payments.

The loan program also plans to help Sri Lanka increase tax revenue and implement major tax reforms, including more progressive taxation and broader corporate taxes and VAT.

It aims to help the Sri Lankan government achieve a budget surplus of 2.3% of GDP by 2024. It projects a deficit of 9.8% of GDP in 2022.

Nozak said tax collection in Sri Lanka was very low, but new taxes collected must come from high-income people so that the poor and vulnerable are not affected.

The IMF will also help the country – where inflation hit 64.3% last month – restore price stability through data-driven monetary policy action as well as greater central bank autonomy. . This would require a new Central Bank law, the IMF said.

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