RE:2 sets of leins? Please Explain - and Who is buying them?Hi Tiny
My understanding is the private placements is ofr units of debt not shares. It something like a bond.
By pricing my understanding is the return on investment ( interest to be paid for holding the commitment to the end of term.)
They will be bought by investment house and private qualified investors under the income tax act. A qualifed investor has to have more then 1,000,000 dollars in cash assets or income above 250,000 dollars a year to qualify I believe. ( Thats what all the concerns are with our finance minster and his rich crony friends in the news last week.)
They are due in five years not 4 years and that works out to 65 million a year in principal payment plus interest which i figure will be about 25 million a year for a total payment of 90 million a year. Very douable . The big difference is we won't have to put away another 200,000,000 in a bank account to please the bankers.
I don't know if you saw my previous post explaining the cash flow. But as to the line of credit that sits in place in case you need it. You only use it when your short of cash for ashort period and only pay interest on the the amount you use for the preriod you use it. Personally I don't think we will need it that much.
The reason for the two liens is because the bank is seperate and always want to be first in line to collect in case of default . It is like having a first and second mortgage. The Private placees are in second place.
Yes if there is a default they own everything. With the cash we are generating even at these low prices I doubt very much we will go in default . My guess is that that this is going to be filled before the end of the week if it isn't already.
The beauty of these loans they collect interest on the whole amount for the five years instead of on a reducing balance.