RE: RE: RE: North Americab Heat WaveYou can read the previous posts for more information but the jest of it is that in order for AG.UN to get the last round of re-financing done they have pretty much relinquished their ability to pay dividends, acquire companies, etc. Any extra cash flow or money from the sale of divisions MUST go to pay back these creditors. All this in addition to an interest rate of LIBOR plus 10.25% (WOW, did they have to go to a loan shark)
The question that then arises is what about the $100 million of convertible bonds that mature in July of 2011. They cannot borrow more money, they cannot sell assets, they cannot issue shares (all because of the financing restrictions they agreed to). What's left. Refinance them. Now if you were a convertible bond holder would you refinance your bond with a $12 conversion price that currently exists? No you will either demand your money back or a strike price closer to market price. Currently it trades at around $2.14. So if we add maybe 30% (where most Conv.Bonds are issued) we get a conversion price of around $2.75. Now divide $100 million by $2.75 and you get $36 million new shares.
That's one crap load of dilution. A heat wave in 2010 will only benefit the existing creditors. AG.UN cannot pay you a dividend and by 2011 the heat wave will be history but the Convertible Bond maturity will be current.
This is a great business. As soon as they go through a proper restructuring ( 2011) and fire the current management and board of directors (probably at the same time), it might even become a great investment.
Good luck to you. I just wish I had the cahoonies to short this sucker when I identified this quagmire many months ago. Oh well, at least I stayed away from buying it.