Post by
Mostlyserious on Jun 27, 2023 11:28am
Big month coming up
Some may have forgotten, may have never read the detail or choose to deliberately ignore or detract from:
"The Company has entered into a Forbearance Agreement (the “FBA”) with its secured lender for a six-month term up to July 31, 2023. Under the FBA the Company is required to remain current on principal and interest obligations and is subject to a minimum EBITDA threshold. In addition, the Company is required to make principal payments of $2.75 million over the next four months. The Company has sufficient cash and working capital to meet the principal payment requirements. The Company is current on its principal and interest payments for its secured debt obligations."
The corporate updates so far speak to the ongoing requirements. The larger payments were facilitated by the $5 million private placement. What the updates don't speak to is what is being looked at for July 31st. March 31st financial resuls show that most of the PP had been used, and there is rounded down $10 million in term loans being current (and a working capital deficit at around $8 million - financial statement analysis 101 speaks to liquidity metrics).
I believe it is rarely in any lenders' interest to push companies (including KNR) into bankruptcy because then they have to liquidate assets to recover their loans. Too much work and usually get pennies on a dollar. So, best to let the show go on as long as it is producing some positive cashflow, and request that company raises some more money inbetween. PG came out of the woodworks on Twitter after many quarters which pumped the SP for better PP terms a few months ago. Is that going to happen again, or if the same supporter comes up, will this be the time that the proper price is paid? IMO financiers hold all the negotiating power and the share price relatively speaking is not much more than a third of the one a few months ago.
IMO, the current updates on meeting the requirements of the FBA are relatively meaningless in the context of what will happen when the current FBA expires, at the end of July. That will be a revealing update and will likely constitute some extension of the agreement and we will have to see whether a chunk of cash would again have to be raised through dilutation at the significantly lower SP than the last time.
That is the reality, them's the undebatable facts.