RE:RE:RE:RE:RE:RE:RE:RE:RE:jmo, I don't see any pot company taking over any other one. Actually the runway is 3 months shorter. If they don't find a way to clear out the debentures before July 2021 that the banks approve, they will lose the bank line too.
I hope they put up a great quarter but if they do and the equity starts to lift, they will almost definitely try to raise some capital using the shelf. Hopefully for both of our sakes, they use the equity raise to buy back some converts at a discount to par.
I wouldn't count on a rollover unless the conversion price drops below the price where it's trading and the interest rate is increased. YTM right now is 125%. That's the bogie for refinancing, not the 6% which is kind of meaningless. The hedge fund bought the converts originally for the conversion option. Any rollover would be prohibitively dilutive.
johnale wrote: well I think there are a 2 scenarios where the debentures wont get you the best return.
most bullish scenario and the roll over scenario.
There is also a wash scenario where minor dilution is required and debentures are made whole.
I think completely cratering the equity to pay off the debt is an unlikely scenario - given their cash position, and 19 month runway to maturity. Unless everything basically goes to complete sht.
and .. if thats the case - they may not get the cash to pay the debt and the debt may need to convert to shares which would be difficult to sell. or the debt gets rolled over.
I think a prudent thing to do would be to hedge some in the debenture in case that one dilutive scenario hampers the equity but the debenture is made whole.
But there are several scenarios where the equity would give you the best return.
Again - I would say we need an update and you need to see financials from Q3 to get a handle on where they are and how far they need to go. Given Sales across the country have been up significantly... and it looks like we are staying home for a few more months..... sales may be significant.