Q: The convertible debenture with Mill Road Capital has me confused. If it converts into shares at $8.25/share that means the company would issue 1.8 million shares to pay back the $15 million in dentures. In addition the company has the option to pay the interest for the first 2 years "in kind" which I assume means shares of the company and not cups of coffee :) If this option is exercised the principal amount is increased by the amount of interest owing. I don't get it. If the company chooses this option it sounds like they are paying the interest charges twice, once in kind and the second time by having the principal amount of the debenture increased. Is this normal? Thirdly the debenture has a net settlement feature. It says the company can pay off the face value of the debenture in cash and any excess value of the underlying security in shares. Why does the company have to pay back more than the face value of the security if the shares are trading above the conversion price? Am I understanding this correctly?
Kenn
Kenn