Response from CEO Here is the reponse I got from Scott Moore regarding the recent debt subordination NR. he gave me permission to post his response.
Dacha owns a secured debenture in FAMCO, whose sole asset is an asset management company called Monarch Wealth. One of the shareholders of FAMCO is Forbes and Manhattan Inc.
Monarch is subject to regulatory capital minimums as it is regulated by the Mutual Fund Dealers Association.
Monarch required a capital injection of $550,000 to satisfy its regulatory capital requirements. Dacha was unwilling to provide such capital as it had already impaired the loan to $1.5 million in its last financial statements. FAMCO is currently negotiating with outside parties to divest the Monarch wealth assets. Forbes and Manhattan was willing to put the capital in to help facilitate the sale process for no financial consideration other than to receive these monies back, in priority.
Dacha agreed and sought TSX approval to sub-ordinate its secured debenture in order to facilitate the cash injection from F&M. Approval was granted by the exchange. Without the capital injection from F&M, Monarch would have been offside its regulatory capital and likely would have resulted in its in-ability to continue operations, thereby rendering our debenture worthless.
This is a legacy asset and would be considered a non- material transaction due to its small size. However, as Mr. Bharti Is Chairman of Dacha and an officer of F&M, the subordination is a related party transaction and approval was required from the exchange as was separate disclosure Also note that our reported NAV has never included the value of the debenture as the exchange views net assets as a combination of cash, liquid securities and inventory.
I trust this answers your question.
G. Scott Moore
President and CEO
Dacha Strategic Metals Inc.