RE:RE:RE:RE:selling stocks to private firm is not god ideaThey will call a special shareholders meeting to approve a pref deal if they have to. I'm sure that would get approved this time around. PE would be investing for the upside in the equity and not the coupon rate on the instrument.
visionaryfool wrote: Good point lumberfeverlong. Although from the general meeting, CXR is not allowed to raise prefs (was denied at the shareholder meeting). So that leaves them with convertible debentures.
Look at what their debt is trading at... I don't think they'll get a deal better than 15% to 20% as anything better.. and the PE could just go and by the bonds. So I don't think it'll be anything BUT commmon equity... and it would havee to be a LOT of it. If they raise say $500M USD by issuing 100 million new shares... than the current shareholders get diluted to 33% and PE takes 66% but I think thats what it will take to get the debt issue under control.
Guys, essentially, they have to raise equity for the shiatty purchases they made with COVUS. The AMCO pharma is good but the COVUS acqusition is what sunk them.
Lumberfeverlong wrote: I know I sound like a broken record, but the capital transaction does not have to be for common shares. It could be for either preferred or convertible debentures with a lower yield or interest rate than the higher cost debt. There is no limit to what they can raise with that from a dilution perspective to common shares because there won't be any. They then take the proceeds and redeem the higher cost debt. At the end of that process, he balance sheet should look a whole lot better.