A Debenture A Debenture, which is a debt instrument that is unsecured by collateral, is about the best type of financing any business can obtain. Debentures are only backed by the credit worthiness and reputation of the issuer. ROE put up no collateral and the only backing for this loan is the potential of the Company which speaks volumes for ROE’s potential and the confidence these financial people have in ROE’s potential. It is a rare that a Company at the stage of ROE could obtain financing by a Debenture.
A $5.0 Million loan that is unsecured at a rate of 8.0% interest is phenomenal.
The interest is to be paid quarterly and can be paid at the rate of 8.0 % cash or 10% in shares based on the conversion rate of the previous 30 day average price. This again is excellent. The company can choose a tiny bit of dilution or pay cash.
At maturity the shares are convertible at 25 cents per share or by payment of cash at the Debenture holders option. So if shares are under 25 cents five years from now the Debenture holder will want cash, which the company likely would not have if the shares are still under 25 cents and the debenture holder would be left with nothing but a law suit - no security. If over 25 cents then the shareholders can take shares, so ROE, has in fact, a $5.0 million financing at 25 cents per share when the shares are trading at 14 cents. This is again a great deal for ROE.
After March, 2021, ROE can force conversion at 1.00 per share. This is again a great deal if the shares are over $1.00 per share. If they are not over 1.00 per share, then ROE does nothing. Great deal for ROE.
Best part of the deal is that $5.0 Million, which is hard to raise, is available right now to assist with ongoing capital expenditures and general expenses. (Maybe a few burgers or Fajitas with a Cerveza or two on a hot day will help.)
The Directors, Management and Staff have done an excellent job so far. I might add that not many work for free but the top people like Mr. Telfer,who owns over 18.2 million shares that he paid for at the rate of 25 to 30 cents each and he owns at least ten million of the 50 cent warrants is not only working for free but investing Millions of Dollars and is prepared to invest Millions of more dollars. So, I don’t think he was concerned with raising burger money for himself, if in fact he was one of the investors. Most of the other Directors have invested millions of dollars as well.