RE:RE:RE:RE:Notice of Withdrawal ,Oct 5Teflon2Hype wrote:
I will say that your rational that larger loans bear a higher interest rate is backwards. The smaller loans bear a higher rate due to fixed administration costs having to be derived from a smaller amount. Loan interest rates are based on security and that is why I figured that the creditor would have demanded an equity raise to lower their D/E but obviously they did not. Why not?..Well once again that document is a secret.
Convertible (i.e. dilutive) securities are issued because they can get a lower rate than debt without any potential upside with equity. This is a simple fact of capital markets and financing. The 12.5% 5 year loan with minimal amortization is replacing a highly dilutive security that was coming due in March. In addition, the extra $ amount went to funding about $2MM more in run rate EBITDA.
Keith
krichards@national.ca