PEXA flags debt covenant breach after regulator floats ‘unsustainable’ pricing cap
Investors have criticised the proposal, which has triggered a 50% fall in PEXA’s share price and could compromise its ability to access debt financing.
Institutional investors in electronic conveyancing monopoly PEXA have united to criticise a pricing decision from the industry regulator which has smashed the company’s share price and raised the risk of it breaching its debt covenants.
PEXA’s stock price is down around 50% since NSW regulator IPART in March revealed plans to develop a strict new cap on the fees charged by the company after efforts to force competition in the sector failed.
During a public hearing on Wednesday, PEXA CEO Russell Cohen warned that the proposed regulatory model would “produce an unsustainable financial profile in the longer term” and stressed that the company’s “ability to secure debt funding would be jeopardised”.
“We would breach existing debt covenants given the projected impact on our cashflows and we urge the Tribunal to please take note of that,” Cohen said, according to a transcript released on Thursday.
