RE:RE:RE:RE:RE:RE:RE:Where Are All The Institutional Buyers?Yes it is a given that 81% of the 2018 deb converts. The question is what they do with the cash portion that needs to be paid. In the cc they said they can fund it with cash flow from their mine plan. The alternative would have been much worse, an equity financing at a low share price to pay the cash portion.
What he was worried about is the kind of dilution where they issue shares for cash, then p iss away the cash without any return. The kind of equity financing dilution to fund the operations of a money losing company. If a company is making money with free cash flow, there is no need to have an equity financing, at least not in the near term.
Dilution can be good if shares are issued at a high price to fund a project that makes even more cash, a project that has a high return on investment like Marmato. Companies with overvalued shares like Amazon and Facebook would do well raising cash with their overvalued shares.
Obviously it isn't good to have an equity finance when the shares of GCM are extremely undervalued. Management would know this and most likely would avoid equity financing under 17c pre-split. When a company is making money, they have a choice of when to do an equity finance at a better share price. Versus a money losing company that has no choice and must do it at any bad share price.
Method wrote: They will almost definitely be issuing stock to pay off 81% of the 2018 debt. Its not a bad thing to pay off debt with stock valued 70%+ higher than the current price.
To be clear, not all of the 2020 debt will be extended to 2024. Debenture holders have a choice as to whether they want to keep the 2020 bonds (GCM.DB.V) or convert them to 2024 bonds (GCM.DB.X) if they consent at all.
I personally chose to keep half as 2020 bonds and half as 2024 bonds.