RE: RE: RE: RE: RE: RE: RE: Q1 - Security values I have a plan that would settle this. Of course the shareholders will hate it but I am just thinking of a realistic way in which the company can be saved and the debtholders taken care of to an acceptable level. I believe this would be a satisfactory resolution under CCAA.
Bank
They stay as is with modified maturity dates (If needed) given the implementation of the following.
Bondholders
They take over as the new equity holders of the company for a significant reduction in the outstanding debt. The can negotiate on the remaining debt just as DEXO did since what ever discounted debt they buy only increases the equity value (Win-win) Equity holders then kick the bums to the curb and install competent management.
Debentures
They take an 80% of face haircut. The face would then be worth $20 with 6.25% interest rate. YLO would reduce the indebtedness from $200 million to $40 million and the the annual interest payable from $12.5 million to $2.5 million.
The bank is happy because there is now plenty of free cash to service the loan into the foreseeable future. The bondholders are happy because the value of the company will increase and in time they will actually see a profit (If all goes well). The present debenture holders are happy because the cash is sufficient to service it till Oct 1 2017 which means as the market grows comfortable with the controllable debt and the new management, the market price will move close to the new face with a very respectable interest rate....and life goes on in the land of Yellow.