company gets an unexpected lifeline and has to pay a hefty price for it
initial interest rate for the new loan stands at 14% which moves up to 17% next year. While brutal this shouldn't come as a suprise given the state of the business. When investing in near dead companies investors demand big risk premiums and this is no exception. Conditions could have been much worse though as fees and warrants are looking rather small given the weak negotiating position of the company. Even better the lions share of the interest payments can be made "in kind" so the company might chose to give out some more shares instead of giving away much needed cash.
Hardly anybody was thinking that the company would manage to buy this lifeline but they did. Terms are no fun but given the circumstances they are quite acceptable. Market cap stands below $25 mln and offers considerable upside at this point (perhaps another 100%).