Earlier this week, BBTV Holdings (TSX: BBTV) announced that they closed their upsized 7% convertible debt offering, bringing in $37.3 million in proceeds. The debt will mature in five years, on June 15, 2026, and have a conversion strike price of $10.55 per share. They note that about half of the proceeds will go towards paying down their 8% convertible loan and that they worked with lenders to extend the maturity date on the existing debt to May 26, 2026.
Two analysts changed their price target off this news while Cormark Securities resumed coverage on BBTV with a buy rating and C$17.00 price target. BBTV currently has seven analysts covering the company with a weighted 12-month price target of C$18.64, or a 135% upside. Out of the seven, two analysts have strong buy ratings, and the other five have buy ratings. The street high sits at C$22.50 while the lowest is C$15.50.
In Canaccord’s note, they increased their 12-month price target to C$18.00, from C$17 and reiterated their buy rating on the name, saying that the raise plus repayment show a “cleaner path for management.”
Canaccord seems to be very bullish on the name now, as it mostly gets rid of the RTL debt and leaves the management with $17 million to “pursue its growth.” They believe that if this debt wasn’t dealt with accordingly, it could have lead to a debt spiral where “a declining share price increased the potential dilution upon conversion which in turn compromises the share price, and on and on.”
They now believe that the company has the cash to invest in their Plus Solutions product and potentially M&A. The analyst makes note that the company has been operating with “a fairly restrictive financial capacity through much of its entire existence,” as it only received roughly $2 million out of its $170 million IPO.
Canaccord says that this raise does not affect their first-quarter estimates in revenue or EBITDA but has slightly lowered their earnings per share and free cash flow estimates due to the cost of paying the debt.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.