Re-Posting here for more readers Just going to say this one final time because it's getting tired.
Intermap has officially avoided formal insolvency proceedings 3 times (2010, and twice in 2016); by restructuring debt. The 2010 occurrence is neither here nor now. The two this year both occurred as a friendly workaround by Vertex (lower interest, lower penalty).
However, on numerous other occasions, when it became difficult for Vertex to receive adequate return on the risk capital they were providing, the two entities got creative and found very reasonable middle grounds on every single account. This was done by Vertex cancelling tens of millions of convertible shares (decreasing future dilution), adjusting the interest rate over time to measure the risk climate they were in (from 16% to 25% back to 15%), using different forms of notes, receiving different forms of convertible equity, and of course, when the TSX would no longer grant any more convertible equity; the notorious royalty; which now serves as a placeholder and a variable interest rate of 17.5%, as well as a long term debt asset that Vertex can carry on it's books at an approximated fair value of $7.3 million.
Long story short, Vertex has been a friend and a partner to Intermap.
Of course, there are fears mounting they they have become predator.
However - what purpose does it serve for this friend/predator to quit the pattern of restructurings, and force formal insolvency?
This is what I am asking of the bears. Please provide a factual, numerical scenario where they can force a formal insolvency next week, and sit to benefit from it both now and over the next 6 months. There is only one scenario where this can occur and if it is IF the financing is currently back to square one, with no other sources of financing being lined up. The reason this is a big IF is because we know for certain that Intermap has not PRed it as such. And we know they would, if they knew. Also, if Vertex knows (and they've been talking directly with Airmap for over 2 years now), they never would have restructured both times in 2016 and added the continued $2 million in debt a few weeks ago.
Further - Blott and Lutdke would have no business being here at this stage if the intention was to force bankruptcy.
So, there will be another out of court restructuring.
So, in these restructurings, can they equitize their debt? Yes. But why haven't they on both other occasions this year? And why won't they next week?
1) They are the biggest shareholder.
2) They will lose $263 million in NOLs.
These NOLs are largely forgotten because they cannot be assigned as deferred tax assets until the company shows profitability. If ownership changes too much in any restructuring, those NOLs are lost.
I would also like to take the time here to point out that JMY's royalty thoughts are more ignorant than I previously thought. Under his scenario, NOLs of $263 Million would also be booked as DTAs. So, as soon as Intermap hits recurring revenues of $10 million per year, they'll likely see a $500+ million increase in net assets overnight; which would send the price soaring on basic BV multiples across the board (especially considering software is in fact a fixed asset), and completely crank up that Enterprise Value, which Vertex can then finally put a nice price tag on this company and exit flush to the teets (along with all of us).
Anyways, the NOLs alone can explain why they have not been exercising any convertibles. If they want to own the company, they'll want to own it when they can get Orion to have a book value once again. This can explain why they aren't willing to become 20% owners just yet.
But remember, in Canada, once they surpass 20% ownership as slowcheetah explained above, they must submit an offer to takeover the company. And now we get right back into the conversation about this turning hostile and working against them very quickly.
So again - restructure is the status quo and the safest option going forward.
Intermap has been close to bankruptcy since 2008 - and they've staved it off on several occasions. When you see companies survive that shouldn't have, you need to find out why. In this case, we look to Vertex - on day 1 they could have owned the company for less then their initial roll and outlay, but they chose to be a backer instead of operator. They found something worth saving and have continued to pump a ridiculous amount of resources into this small saas/paas company. They are now in a situation that they are so deep in, they must stay the course - only until the moment they feel there is no opportunity remaining - whereby I don't think it's even worth their time or effort to bring in Blott or Lutdke for the purpose of lieing to another potential owner, just so they can drop the bag of **** at their door then run as fast as they can down the street. It just doesn't work like that.