1933 Industries Inc C.TGIF

Converts?

[Dumont]

Curiously little chat about the company's request that convert holders extend maturity by a year with zero compensation beyond the interest which can still be paid in company shares valued at 10 cents per share regardless of where they might actually be trading. 

If the holders refuse to extend the approximately $4 million still outstanding the company will have to use most of the money they recently raised just to repay that debt. That suggests the company will have to come back to the market to raise any cash needed to meet short term needs, and given the amount of warrants outstanding from that recent issue , another cash raise may prove pretty difficult at anything approximating current market prices.

I suggest that having the cash back in Sept will prove potentially more profitable than holding a one year convertible whose recent trade was at a $10 discount ( $ 90..) and would likely trade is somewhat lower should the company need to come to market for short term financing.

Perhaps a little sweetening of the offer to convertible holders might tweak interest in extending maturity: suggest upping the price at which company can force conversion to .45 or so is a start ; as well as paying interest in cash or 10 cent shares at holders discretion.

Counter arguments?

[DashForCash]

No need for a sweetener as this extension will easily pass. The flat stock price of late may also be tied to a degree to the technically unconfirmed extention at this point.  The results after April 14 will provide the market with full certainty that the debt has been extended and the current treasury is protected short term and can be applied to capital projects related to growth per the

[Dumont]

I suspect that if the extension was agreed to, your projection may be correct. However, at current market prices, shares and trading price of debentures, Deb holders must take a leap of faith, as the extension would, all things being equal, allow debenture to decline . Given the possibility that the debs are not extended, share price will decline somewhat in anticipation of new share offering

[theTransporter]

Company will note raise cash in order to pay debenture debt in September.  They would rather propsoe a decreased conversion price of let's say $0.05 per share which will be enticing to almost all debenture holders to convert.  I know I will if that was the conversion price.

[Dumont]

That would seriously dilute shareholders and almost surely drive price down to between 5 and 10 cents. Do not see that As a reasonable or cost effective strategy.