I have read the Plan Term Sheet and I'd like to lay out my understanding of the situation. I welcome any comments to add clarity and/or correct any potential errors of understanding on my part. Some of this will be stating the obvious to some of you so please bear with me. The so-called "Plan Sponsor Group" (PSG) is putting up $25M and will have the right to potentially 89.29% of the Class A shares of the new company (Piksel) which will ultimately be acquired through Class B shares. JEC is giving KITD a $3M loan and will be "paid back" with the remaining 10.71% of the new company's Class A shares. The regular stockholders (retail shareholders like myself) will get warrants which can be exercised within 30 days of issuance to buy Class A stock in the new company. The Class A stock purchased by the retail shareholders will be purchased from the Class B shares of the PSG. The PSG would potentially sell, nominally, up to 39% of their 89.29% stake. I'm not exactly sure what the PSG is going to do with the money it collects from retail shareholders who buy in. There is a note about it being used to redeem shares, which I'm going to interpret as meaning that the PSG will just get that portion of their $25M back. The PSG will end up owning the following amount of Class A stock in the new company: (89.29% - whatever retail shareholders exercise warrants. To be no less than 50%). So the PSG is giving retail shareholders the option to sell the stock now or invest some more money alongside them and make a go of it on the new company. Question: How much will retail shareholders have to pay to exercise their warrants?
Heck, you might as well exercise the warrants or what are you left with anyway but garbage. So you might be buying garbage but at least it is a form of garbage that has a chance at appreciation in maybe a few years.
Wonder what happens now with all the lawsuits, does BK throw them out the window?
The lawsuits will be settled as part of the BK process. The parties to the lawsuits will get rights to equity in the same way that the current shareholders will get. The warrants allow you to buy into the re-capitalized company at the same share price as the sponsor group. Whether the warrants will be worth much or not depends entirely on the financial performance of the company (revenue and profits) and this is a big unknown so far since the company has not filed this information.