Oct 17, 2021

Cory Diary : Keppel DC REIT - NetCo joint venture with M1

Essentially, M1 setup a subsidy company called NetCo to buy it's own M1 network asset in which KDC will invest in the bond. M1 will continue to do the operation support of it (obviously). So essentially what this means is M1 do asset sale to itself and lease back to itself. Talking about financial engineering this is really ultimate. Desperate moves ?

So what does that means to KDC ? High Yield Returns. So why aren't M1 borrows from Bank instead. Likely not cheap either for used telco assets. The banks probably value it very low to none. So essentially could be considered unsecured loans.

At this high cost of borrowing, it could be painful to M1. So need to make sure I don't touch M1 stocks at all. So what-if M1 collapsed ?  Is just a relatively small amount to KDC so unlikely to be an Eagle event but will be a dent to KDC valuation. Now, I have to watch M1 now as KDC shareholders. Could this also be a hint that there is lack of growth for KDC ?

And why don't the external lenders cover all the needs and need KDC to support some ? Could it be priority of default for bond is lower and there won't enough asset to be covered beyond what the lender will lend. Good News to Singtel ? Mean time freeze on KDC build up just to be safe.


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  1. M1 has been delisted already right? Absorbed by Keppel. This is really an internal left hand right hand deadling, using KDC's extremely low cost of equity financing to finance M1 network assets. Instead of letting KDC be the equity owner of the network assets, KDC is the bond/pref owner here with higher yield, some form of downside protection but no upside gain. Rather weird deal to me.

    1. Do Keppel Corp needs KDC for low cost financing ? IMO KDC owning M1 asset is high risk. Fortunately didn't. If M1 screwed, the asset is worthless.

    2. But you are right. M1 not listed anymore. cheers