RE:new financing ...Did i not read somewhere that their CURRENT cost of capital was closer to 30%?? Anyone validate or have additional comments pleae post....
what you saw, up until a year of two ago, was that the full in cost of borrowing was over 22%, when an obscured "fee" to TEC got rolled into the cost of the term loan.
That fee of $50m got rolled into the principle. Since then the real cost has been the 15%- on that higher amount.
So 15% is (was) the cost.
That cost has only been reduced. Plus removing the loaded gun from TEC- for a price.
The other cost is some pretty substantial dilution. If the SP increases- the new lenders get to buy 10% of the shares at 49 cents. So if the SP goes up, dilution comes in to diminish the gains. Since PEAs fundamentals have not changed, there is no compelling reason to think an SP increase is going to outpace the dillution much.
There seems to be some slippery further dilution that TEC gets if the promised asset sales dont retire that 18% Bridge Loan- a tidy price for TEC handing in that loaded gun.
I would guess the new lenders are planning on long term profits from holding those shares they get to buy at 49 cents. Thats probably how long everyone else will have to wait too.