How will the proceeds from the offering be allocated (e.g., debt repayment, capital expenditures, acquisitions) and what impact could that have on the company's cash flow and earnings outlook?

Allocation of the $1 billion proceeds

Kodi Games’ filing does not spell out a “use‑of‑proceeds” table, but given the structure of the private placement—two senior‑unsecured note series maturing in 2033 and 2035—and the company’s recent statements about needing a stronger balance sheet, the most probable mix is:

Impact on cash‑flow and earnings

1. Near‑term cash‑flow – By refinancing higher‑cost debt, the company’s scheduled interest outflows should compress by roughly 1–1.5 percentage points of its current 5‑year net‑present‑value of debt. Assuming the existing senior debt carries a weighted‑average coupon of ~4.5 % and the new notes are priced at ~3.8 % (a typical spread for senior unsecured), total annual interest expense could dip by ≈ $30‑40 million (≈ 5‑6 % of FY‑2024 EBITDA). This directly improves free‑cash‑flow (FCF) generation and bolsters the liquidity cushion needed for CAPEX.

2. Earnings outlook – The lower financing cost will lift net‑income margins by 10–15 bps on a standalone basis, translating into a ≈ $20‑25 million increase in FY‑2025 earnings after tax (assuming a 25 % effective tax rate). The CAPEX allocation—mainly toward next‑generation compression and processing units—should begin to drive incremental EBITDA in the 2026‑2027 window, positioning the company for a mid‑single‑digit% earnings growth trajectory beyond 2027.

3. Balance‑sheet leverage – Net‑debt to EBITDA is expected to fall from about 3.8x to ~3.2x post‑offering, a level that reduces credit‑risk perceptions and may price‑in a 3‑5 % upside in the equity market, all else equal.

Trading implications

• Long‑side: The note issuance signals a proactive capital‑structure overhaul that should strengthen Kodi Gas’s cash‑generation profile and enable modest organic expansion. For investors with a fundamental‑bias, the upgraded balance sheet and lower financing burden justify a buy‑on‑dip if the stock trades below the $10‑$12 range (mid‑year 2025 consensus).
  
• Short‑side beware: If proceeds are diverted heavily into capital‑intensive projects that pressure near‑term cash‑flows, the upside could be muted. Monitor any subsequent ”Use‑of‑Proceeds” filing or Investor Presentation that details the actual split; a heavier capex tilt (≥ 50 % of proceeds) would shift the cash‑flow breakeven point further out and could depress short‑term earnings, creating a temporary downward pressure on the stock.
  

In short, the $1 billion notes offering is most likely being used to refinance existing debt and fund growth projects, a move that should lower financing costs, improve free‑cash‑flow, and modestly uplift earnings over the next 12‑24 months, providing a positive bias for the equity while leaving room for price‑action based on the exact allocation mix.