UBS notes Vocus has abandoned the NZ asset sale process. The answer to whether the company needs to raise equity to de-leverage depends on the new covenants negotiated as part of the re-financing, the broker suggests.
The most likely scenario, UBS believes, is that the company can negotiate new and higher covenant limits, in which case an equity raising would be unlikely in the near term.
Neutral rating and $2.60 target maintained.
Sector: Telecommunication Services.
Target price is $2.60.Current Price is $2.29. Difference: $0.31 – (brackets indicate current price is over target). If VOC meets the UBS target it will return approximately 12% (excluding dividends, fees and charges – negative figures indicate an expected loss).