RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Debentures or commons.... I suppose we will know soon as MMCap will show up as a >10% shareholder on SEDI filings upon conversion
I see what you are saying, so upon the first conversion there will essentially be two series of debentures, the principle and accreted portion (non-listed). How do you calculate 13.5m? I get more like $12m
So the only way to cash out of the accreted portion will be at maturity in Sept 1 2023 then? What happens if the principle is force converted prior to that? Accreted portion would be paid at that time?
As for Brents comment, somewhat agree, admittedly this is fairly complicated
Method wrote:
We don't know how hedged MMCap is unfortunately. I'm not even sure they keep their filings up to date.
On the second point, the accreting amount is not cash interest which is why I think they highlighted the cash interest was down to $2.9m from $6m on the debentures and separately discussed the accretion rate of 11.06%.
Basically, the remaining debentures in three years will have $36.5m principal and $13.5m in the new accreted debenture and they will start paying $500k/month at that point to reduce the balances. The remaining debentures are probably a buy on their own at 31 even if we weren't getting all of the common shares but that's mainly because of the borrow cost as it stands now.
WealthBuilder99 wrote:
Very helpful. Thank you for taking the time to explain.
Is there any evidence MMCap is actually hedging their position to a large extent. I can only find short interest information of around 10m shares, which is fairly low, considering how large their position would be. I recall they had bought $80m, if I am not mistaken.
Refering back to the press release:
"The total principal amount of convertible Debentures outstanding will be reduced from $100.0 million to $36.5 million and the maturity date will be extended from October 19, 2021 to September 1, 2025 unless repurchased, redeemed or converted prior to maturity. The remaining Debentures will accrete at a rate of 11.06% per annum, compounding on a semi-annual basis commencing on September 1, 2020, and ending on September 1, 2023. The accreted portion of the principal is payable in cash but does not bear cash interest and is not convertible into the Company’s common shares. The accreted portion of the principal will be evidenced by a separate series of debentures, which will not be listed on the Toronto Stock Exchange."
- "the remaining debentures will accrete at 11.06%", is that not referring to the $36.5m remaining DB?
- As in the next paragraph, it again refers to them as "the remaining debentures"
" the conversion price of the remaining convertible Debentures outstanding will be reduced from $2.45 per share to $0.285 per share"
But I see what John is pointing out. 2.9m annual interest / 36.5m = about 8% yield. I suppose I am also unclear on the accretion, is that not the interest that is accreting?