RE:RE:RE:RE:the warrants and the debenturesBarkis wrote: Holy Sh**t
Now that's a fine kettle of fish.
How did they come up with all these rules?
They were created as an income trust with large and reliable cash flow, loaded down with a huge amount of debt to improve the return through leverage. Then people stopped looking in the Yellow Pages printed directory whenever they wanted to buy something and the cash flow started to drop.
This created a problem with servicing the huge debt. There was a restructuring in which the debt holders got senior secured notes, convertible debentures, and most of the new common shares. The old equity holders got a small fraction of the new common shares plus warrants so that if the debt holders ended up getting all of their money back the old equity holders coiuld get some of the upside.
The senior and convertible notes were set up with strong covenants to prevent the company from using most of its cash flow for anything other than paying back the debt. The debt holders also held most of the new common shares, so they could protect their interest that way as well.