RE: RE: DebenturesThanks Widestrides for your footwork.
“The debenture holders are entitled to elect to be repaid for each unit either US$1100 or 200oz Ag (or market value of same) at maturity” was the essence of the terms conveyed in all disclosure documents filed with SEDAR for the entire year of 2004.
If the silver market is not kind, the debenture holders get the principle amount of the loan back and EXN gets the benefit of an interest-free loan for 3 years. With the blessing of higher Ag prices upon everybody, the debenture holders expect to be rewarded by electing to receive repayment in silver bullions (or market value of same).
That is absolutely a fair deal considering the circumstance at the time. Now the allegation of some confused souls is implying that EXN managed to insert some fine prints somewhere that effectively foil the terms of repayment of 200oz/debenture. As a result, EXN supposedly has the freedom to produce whatever amount and deliver (subject to 50% rule), say 20oz at the end of 3 years and return 90% of the principle amount (interest free) to the debenture holders.
If true, EXN insiders would had dealt a nasty trick on their friends and relatives (who, according to allegation, hold the debentures), and that’s a foul play. On the other hand EXN has taken all conscientious effort to honour the terms of a fair deal (the debenture), and these souls are crying FOUL. They are very confused and confusing, aren’t they?
The debenture is largely a non-issue but unfounded speculations and allegations are not what we need or the co. management deserves.
The problem arose when someone relied on his interpretation of one paragraph of MD&A and came up with the so called “Original Terms” of the debenture while ignoring what a preceding paragraph of the same MD&A section and all the disclosure documents have been saying: repayment of the principle amount either in cash or 200oz Ag (or proceeds of sales) as elected by the debenture holder.
The MD&A was actually saying, for example, if 90% of the required Ag is in the trust, the holder of each debenture will receive 180oz Ag and the remaining 10% of the principle amount, which is also “REPAYABLE IN SILVER” because that is what the holder has elected in the first place and that’s what the FOUL CRYERS have neglected to see.
The FOUL CRYERS also failed to decipher the meaning of the DEBENTURE VALUATION(based on market price of Ag) appearing in each of its financial reports & the CONTINGENCY FUND established to offset the company’s liability for the silver not yet delivered to the trust. What management has been doing all along is consistent with the fact that the company’s obligation is 200oz Ag/unit and nothing less.
The extension of the maturity date is also a clear benefit to EXN by keeping its cash in the bank-please do not make hindsight judgment later on. All one would need for a better judgment of what the co. is doing is merely the basic ability to tell what amounts to a fair deal as opposed to foul plays, some common sense and care in reading documents. No need to play lawyers & judges here!
Hope this will help settle all the confusion & fuss, which should not have occurred.
KT