Why do they have a $40 Mill credit line when they have $65 Mill in cash? Is the $65 Mill free and clear?
Why do they have a $40 Mill credit line when they have $65 Mill in cash? Is the $65 Mill free and clear? How much of the $65 Million on their balance sheet is spoken for and has liabilities against it? What off balance sheet liabilities does this company have?
They are three reasons I can think of. First, they are burning cash at a pretty high rate so they really need it or their customers are going to feel pressure in a couple of quarters. Second, it is just good business sense because as bad as it is, it can always get worse.
If you want to be optimistic, you could assume they need the working capital to support increased sales.
Suppose there is a long-shot possibility that they buy Dragonwave given their distressed situation but even Dragonwave at a $20 or $30 million purchase price (current market cap is far higher) would be tough to pull off but if Dragonwave runs out of cash one just never knows.