Post by
rad10 on Nov 24, 2018 6:32pm
Revised Proposal
I am going to propose to the board that debentureholders receive a PIK in stock for the March payment in order for the company to buy time. The interest liability in March 2019 is 1.68 million. A PIK would have to come at a premium to the VWAP of the common stock nearer the time.
it will be difficult for the company to sell stock on the open market to fund the interest obligation in cash.
Typically a PIK carries a 50% premium so assuming the stock price remained around 5 cents - debentureholders would receive around 50 million new shares in Zargon. This would slow the dumping into the open market, and would preserve debenture seniority.
There is no rush to convert the debentures.
i hope this can help the situation.
cheers
Rad10
Comment by
Method on Nov 25, 2018 10:30am
i don’t think this proposal makes any sense since you would still have to have a debenture holder vote to change the indenture agreement to allow a PIK payment and you would also likely have to get a shareholder vote approving the dilution. This would cost money and not really solve any long term issues so not worth the cost. But maybe you are just trolling.
Comment by
rad10 on Nov 25, 2018 1:11pm
No equity vote required for either the proposal on the table or a PIK proposal as suggested Method. Just a way of buying time. cheers. Rad10
Comment by
Method on Nov 25, 2018 6:58pm
I thought the reason there is no equity vote required for the current proprosal because it is being proposed at the current market price. If it's for a PIK proposal why wouldn't you need a debenture vote and an equity vote?
Comment by
Method on Nov 26, 2018 9:00am
Rad, This is not my first proverbial rodeo either. I was just pointing out that your proposal wasn’t reasonable given the logistics and the cost.