RE:RE:RE:RE:RE:selling stocks to private firm is not god ideaExactly why a capital raise will likely be for a convertible instrument. The converitbe equity component will compensate investors for taking a lower yield on the instrument. The portion of EV attributable to equity will natually increse as debt is retired. With a stonger balance sheet, the value of common shares will naturally rise starting a nice virtous cycle upwards for common equity.
LaticelnExile wrote: Well at least the full buyout story is quashed with this.. Next, a meeting for the creditors as they no doubt hold the reins ...
Craigbad wrote: Honestly Lumber how would that work. PE would have to pay a huge premium to buyout the debt from where its currently trading to take a lower interest rate? So they would have to buyout secured bonds yielding over 16% in order to get 5% interest on them to save Cxr money? Man, this is baffling!
This could be the final pump.
Lumberfeverlong wrote: I know I sound like a broken record, but the capital transaction does not have to be for common shares. It could be for either preferred or convertible debentures with a lower yield or interest rate than the higher cost debt. There is no limit to what they can raise with that from a dilution perspective to common shares because there won't be any. They then take the proceeds and redeem the higher cost debt. At the end of that process, he balance sheet should look a whole lot better.
visionaryfool wrote: mingzhu... you JUST beat me to posting the comment I was going to make.
I don't think any equity raise is going to be meaningful. No PE firm will pay more than its current share price and normally pay a discount when getting share offerings. So I think IF (and its a BIG IF) there is a share sale... it'll be for call it $5 USD. At this level, ANYTHING they raise would be insignificant to the overall debt. Even if they Raise 100% of the current float and dilute the current shareholders by 50%, that's only $260M...... out of ... $3.2B. Their write-off last Q was 2x that.
Anyone care to elborate otherwise?
mingzhu wrote: minority equity, say 20%, only have 10 m *$6=60 m. It make no meaningful reduction of 3.2 b debt,merely 5%. unless CXR is priced as bankcruptcy, private money infusion makes sense. $6 is not bk price. The market got it wrong today. This deal only make people believe that it can pay normal due payment of debt. i believe market will correct itself.