RE:RE:How Do the Converts Get RepaidI'm not sure I agree with you. If it weren't for the major shareholder, I would be certain that the convertible debentures would be equitized. That said, despite that, I think the most likely outcome will still be the equitization of the convertibles.
I'm not sure what you guys expect to happen here? The company has insufficient availability on its credit facilities to redeem its convertible debentures. The credit facility enables the company to borrow only $35 million, of which most is already being used. While the company's cash position could help, the business needs cash to manage its business (and again, does not have enough).
I don't buy the argument that the banks will just lend them more money. Why? There are no real assets to use as colateral and the management has proven quite inept. I wouldn't lend them more money (what's the point!).
So we'll get one of two things (1) a blend and extend of the convertibles or (2) conversion of convertible debentures into equity.
As a convertible shareholder you are going to make this as tough for the company as possible (ask for cash) while the banks will do anything to prevent a redemption in cash. Truthfully, management would probably like to equitize the convertible debentures so they can manage the business.
I don't really see a position in the equity as favorable here. In fact, I think it's worth close to nothing. If I'm wrong, you've bought this too early.
How do you see the company redeeming or negotiating with the debenture holders?
Thanks! Good discussion.