Q: What are details about RSI.DB.E? Would you recommend holding for income? Will it mature on 31/12/2024?
5i Research Answer:
This debenture is convertible, and RSI reserves the right to redeem it for shares using a market-price-average at maturity. This dilution is never great for a stock but it is a possibility with all convertibles. RSI is doing somewhat better, and it is only a $57M issue, so we would be surprised if it does not redeem for cash in December. It may depend on its ability to refinance as we get closer to year end, but if it was 'now' we think the company could easily refinance. It has a lot of debt, but cash flow is fairly steady. Recent results were solid and the stock is finally moving. We doubt the company would want to issue a bunch of new stock just as some momentum is taking hold.