On the form 8K filed 12/8, I reread the terms again.
The item that eludes me here is the LOC ($182) and the Debenture ($75 Mil).
If, TWK has $365 Mil in net worth, Why don't they "pledge" this for their "Lloyds" writings and save the LOC expense?
If the $75 Mil in notes is paid off, right now, that leaves them with $290 Mil, right? This ($290) is enough to support their Lloyds "writings" (Sales) at the 3 to 1 ratio (290 times 3 = 870 mill in sales), more than what Lloyds requires to support $500 million in sales.
This is perplexing me and i FEEL that the Stock holders Net worth is something less than $365 Million right now.
My gut feel is, at the END OF THE DAY (LIQUIDATED VALUE), its less than $200 Mill.
ALSO, I think we must watch the end of year numbers, if they turn in more than $15 million in 4th quarter hits etc, this will reduce their net worth below $350 Mill;
IN THIS CASE, THE COVENANTS SAY: If their "capital & surplus" dips below $325 Million or "Net Worth" drops below $350 (about $15 Mill less than now) they are in default of the loc.
Tangible net worth is not cash. It includes prepaids, receivables, investments held for sale and so on. And remember the LOC is a standby facility; TWK will be playing with its own money, but Lloyd's requires a LOC to back up its underwriting commitments. And there will be reserve requirements as the year progresses. Plus they need operating cash. There may be more to it, but those are some of the considerations. jad