RE: postsI don't think the lawsuits are very material (although I could be wrong) and certainly are not pre-occupying my mind.
At first it was the anti-trust investigations. That could have been nasty, so when AG.UN resolved that extremely successfully, I almost jumped in with the $4.00 bids at that time. What stopped me was the debt maturities. They then resolved that, but I held off when management decided to hide the interest rate they were paying by leaving it off the news release.
Now I am concerned about two things. The first is that not only will AG.UN's cash flow suffer greatly from the new interest they will pay on these new loans, but they are variable loans. You would think with an interest rate of more than 10% the lenders would be happy with a fixed rate, but no, it is LIBOR plus 10%. What happens when LIBOR rises to 2.5% or 3% or more, when the fed starts raising rates. There goes another
.13 per share (there was only about
.20 left from my other calculations).
The second concern I have is the maturity of the convertible debentures. This is almost entirely at the whim of what the share price will be at the time. If it is in and around the $3 ranges then I see no way out of issuing either 33 million more shares or convertibles with a new execise price at maybe $4, which equates to 25 million more shares and probably a few percentage points in more interest.
Even if the economy picks up and they raise the price for their ice (and people even pay it), what is a share of this company worth if they end up with 70 million to 80 million outstanding shares (they currently have 39 million shares and just issued 4 million new warrants).
I just don't come up with $3. I maybe come up with $1.50 and that price makes my convertible debenture problem even worse.