RE:RE:RE:RE:RE:RE:RE:RE:RE:Further Improved Bond BidAs at January 31, 2022 there are $87.0 million of the 10.75% unsecured notes outstanding, as per the 2021 Annual Information Form dated March 24, 2022. (Available on the Sherritt International website).
If the company chose to make the next interest payment in cash, the outlay would be $4.67625 million. Alternatively the company could issue $4.67625 million of additional PIK bonds and buy those bonds and more back in the market at a substantial discount to what they were issued at. On Friday, Contrarian333 kindly shared a fresh quote on the 10.75% notes of 2029, $45.00 Bid - $50.00 Offer. If the company chose to not pay the $4.67625 million in cash, but rather in PIK bonds they could theoretically purchase back $9.3525 million worth of the bonds, assuming they could purchase them at the offering price of $50.00 using the cash they did not pay out. Or they could use $2.338125 million to buy back the newly issued PIK bonds and use the remainder to purchase 8.5% cash pay notes at a discount to par as well. Sell high and buy low! Even if they had to pay through the offering price it would be a very attractive purchase. As the 10.75% notes are PIK they trade interest flat, at least they did when I purchased them some time ago. Do your own DD on this. Re-purchasing PIK notes interest flat prior to the next payment date (July 31, 2022) would cancel the purchased notes PLUS the accrued interest attached to them, a further win for the company and its stakeholders.
Contarian333 please chime in if I am missing something.
Are they purchasing these bonds, or for that matter the cash pays? I don't have a clue, but if I was the treasurer I know what I would recommend.
GLTA