Debt for Equity swapGents, I asked this question before and I can't seem to find the article again but I saw a debt/equity swap which issued more shares at the price which the shares were at, at the time of the bond issue.
So, I ask....if there are any bondholders out there. Would you accept one share of OPTI for every $3 worth of debt?
That would take out nearly $1b of debt with another 300 million shares on the market for a total of say 600 million shares and $1B debt taken off the table while diluting the shares only 50% or so.
If the stock price got to $1.50, the bondholders would have a value similar to what they have now and that would equate to a $3.00 old stock price.
Wouldn't this be attractive for bondholders? Surely the stock price would recover to the old $4-5 dollar range as OPTI would now be at capex, interest, and opex break even....giving us all a $2-$3 new price range....or maybe even higher.
To me, this puts bond holders and shareholders in fair positions.....considering the majority of share/bond holders entry point values, and puts us in a postion where we can make some really good money if we buy shares or bonds today.
If shareholders got diluted anymore, then bond holders would be getting a deal of the century, in my opinion.......and that leads me to ask, why bonds would not be trading at a higher price? Diluting at huge multiples can increase bondholder share value but only by a factor of 2 times or so as the dilution starts to eat away share ownership value. In the mean time, share holder value starts to evaporate exponentially as you only double the bondholders value. So it is only a slight gain for bondholders, and a wipe out for shareholders. Since we have no pension plans or gov't debt or unions to maintain (like GM had) then there is no reason to squeeze the puss out of shareholders as the bondholers are the only ones who we are trying to support.
Last question.........is there any way to know of any insider bond holders? Are insiders allowed to buy bonds....especially if a debt/equity swap is possible?
Any thoughts guys?