xReality Group Limited

ASX:XRG

xReality Group Limited

ASX:XRG
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$0.049 (-5.8%)
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#75
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Reports (2) My Report Forum Investors
Forum Topics XRG XRG Debt Refinancing (28/3/25)

Pinned straw:
Tom73
Added 8 months ago

Announcement from XRG that it’s $4.6m debt with Causway Asset Management (due to mature Sep25) has been renegotiated to a $5m facility maturing in Mar27 with a possible $1m addition subject to conditions. Interest payable quarterly (same as prior arrangement) but also 5m XRG warrants issued at a 20% premium to the 30 day VWAP at initial drawdown, 3 year expiry.

This concludes the debt restructuring for XRG near term, assuming the 30 April EGM to approve the capitalisation of the Birkdale Holding $4.6m debt at $0.05 per share (which I would bet on).

Having moved the Debt issue from a red flag to orange on the Birkdale announcement my view is it is now no longer an issue (white flag?) at least for another 2 years. The business is generating positive cash and they now have a bit more capital to accelerate Operator XR development and sales growth.

The next major announcement in the works is what they are doing with the FREAK business, hopefully some extra cash on disposal, but we will have to wait and see.

Disc: I own RL+SM
Tom73
Added 7 months ago

EGM Debt Capitalised (30/4/25)

Yesterday the EGM to approve the settlement of the $4.6m Birkdale Holdings debt with equity at 5c a share was conducted. 98.74% voted for the the resolution so it was passed with ease as expected. Only about 30% of shares on issue voted, but I expect the Birkdale shares of around 20% were not allowed to vote. The meeting was held in person may have been a factor, or, like me who didn’t vote, most suspected it a forgone conclusion.

With that now formalised, debt comes down to about $5m which does not mature for 2 years, plenty of time for cash flows from Operator XR to ramp up and make it irrelevant.

Disc: I own RL+SM

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Dominator
Added 8 months ago

@Tom73 any additional details on the interest rate that you have seen? I take it by the lack of commentary in the announcement that the interest rate is still 14.5% as per the most recent 4C? Very high cost of capital which is worrying as someone with xReality on the watchlist. I guess management is saying they can beat that rate of return...

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Tom73
Added 8 months ago

Good question @Dominator, I expect the rate is the same but have no further info other than what was on the announcement.

It certainly isn't a cheap rate, however given the potential of Operator XR I would much rather they pay that than have the dilution of a $5m raise which would be around a 25% dilution at the current price. The conversion of the Birkdale $4.6m debt even at a share price of $0.05 I see as much more expensive.

The cash flow impact of the cost of the debt has been in the numbers for a while now and they are FCF positive, the cash cost is around $700k per year compared to customer receipts over the last 12 months of around $14m. If the company is successful, it's the 5m warrants that will cost shareholders more.

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Tom73
Added 8 months ago

Debt Refinancing (8/4/25)

Announcement that the renewal of the Causway debt facility previously announced on 28 March has been implemented. The $5m draw down mostly pays off the $4.6m existing loan, but another $1m is available if they hit $7m ARR (last report was $3.6m but the 4C due at the end of this month will probably show this is now around $4m).

They confirmed the interest rate remains the same (14.5%) and there have been 5m warrants also issued today that will have an exercise price of the 30 day VWAP (a little under 4.5c is my estimate).

With this debt now locked in for the next 2 years and the Birkdale loan being equitised at the end of this month, debt is now a tomorrow problem with plenty of time for operational performance to make it a never never problem.

I bought more yesterday, had a low value order that triggered in the drop. Still a lot more selling interest than buying, but sellers are very hard to find under 3.5c

Disc: I own RL+SM

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