Please explain what Clime Capital Notes are?
Hi James,
could you please explain what Clime Capital Notes are and also if you have a comment on their potential as an investment.
Thanks
Tim H
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Answer
Hi Tim,
Clime are raising $35m through a new convertible note issue with a maturity date of 30th November 2025. These notes will be listed and they pay a fixed interest rate of 5.25% which is lower than the rate they pay on their existing bonds at 6.25% (CAMG). Essentially, buying these notes means you are lending money to Clime at a fixed rate which they promise to pay back, but importantly, they are not secured against the assets of the company.
There are always a lot of detail in these offers that need to be considered, however for me, a rate of 5.25% is low for the exposure of a smallish firm, and it’s fixed which is not ideal as interest rates are likely to move higher. During the year I took some notes in Bennelong Funds Management that are unlisted (+ Bennelong itself is unlisted), however the rate was substantially higher than 5.25%. In short, they look okay but not a standout in my view, have a look at listed Crown Hybrids (CWNHB) which are likely to pay more based on current price of ~$94.
