Post by
woolwich on Dec 07, 2014 2:07pm
debentures
Suggest debenture holders re-read conditions applying to interest payment and redemption. If December 31, 2014 interest is not paid, the company would need to redeem at a price not less than 125% of average debenture trading price in 20 day period preceeding redemption date. Only after July 2015 can the company redeem the debentures for face value plus accrued interest to date.
Given the company's current financial situation non-payment of debenture interest would be the result of simply not having the money to make these payments. If there is no money for interest payments then it seems likely that there would be no money for redemptions. These debentures are totally unsecured and rank as subordinate to all senior debt - of which there is plenty. Non payment of interest could trigger a petition into bankruptcy by one or more holders.
As for paying debenture interest with ARF shares, this seems a non-starter. It would involve the issuance of around 5 million new shares or around 20% of the current issued capital. Can't imagine many shareholders going along with this enormous dilution of an already grossly diluted equity.