Refinancing loans can be a tricky exercise at the best of times, especially given today’s the political impasse at Westminster. Therefore, it was very encouraging to hear this morning that Rosslyn Data Tech had managed to replace its existing £0.75m debt with a new 3 year, £1.5m secured facility from Clydesdale Bank on equivalent terms (ie interest charged to be at 7.75% plus 3 month LIBOR).
We think this is both a positive step forward to accelerate growth and a major endorsement of RDT’s future prospects. Particularly since the company should shortly become cashflow positive, and continues to win blue chip clients (eg KLM, Diageo, BAe Systems, etc), who benefit from its proprietary big data, analytics and AI platform (RAPid).
In terms of the numbers, we have held our estimates, reiterate RDT’s 12.5p/share valuation and look forward to the pre-close trading update in May. What’s more, given the rebound in Big Data stocks during the past 3 months, the firm continues to look materially undervalued on a relative and absolute basis.
CEO Roger Bullen commenting: "I am delighted that we have been able to replace our existing debt with a facility from Clydesdale Bank, which I believe demonstrates confidence in Rosslyn as a maturing business as it prepares for future growth. The refinancing of the Integritie Debt and conclusion of outstanding earn-out provisions now ends all financing arrangements with the vendors of Integritie. The Rosslyn business continues to perform and I look forward to releasing a trading update in May”.