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TeleCommunication Systems Inc. Message Board

  • bend_it_like_buffett bend_it_like_buffett Aug 20, 2013 3:55 PM Flag

    It's obvious they ran the stock up for the new convertibles

    Hard to sell convertible notes with the stock price at $1.30

    Sentiment: Strong Sell

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    • This just doesn't make any sense. The $130 million senior debt refinancing isn't convertible into common stock and was done to extend the maturity date and pay off existing debt with the same bank group. The $50 million in convertible debt was an exchange of debt with a longer maturity date. The conversion rate on those notes is $10.34 with a conversion premium making an effective conversion rate of $12.74. Not sure how a stock price of $1.30 or $3.20 would make any difference with a conversion price of about $10.00 higher. Also it was an exchange not a new sale of notes. I realize you are just making things up so facts don't matter to you. Anyone that wants to see the facts can just look at the recent SEC filings.

    • Believe it or not, real companies actually write convertible notes with the intent of paying them off.

      Believe it or not, real companies go public without the intent of just using shareholders as an ATM.

      Sorry if these concepts baffle followers here. Poor Marty.McPumper. LOL.

      Sentiment: Strong Sell

      • 2 Replies to bend_it_like_buffett
      • Also, how is the company using shareholders as an ATM? Much of the proceeds of the initial public offering was used to acquire XY point, the foundation of TCS's location software. Once the stock is public, trades among individuals don't raise any additional cash for the company.

      • The subordinate convertible debt had a balance of $93.5 million with a 2014 maturity date. $50 million was exchanged for a 2018 maturity date and $10 million was repaid. This leaves $33.5 million due in 2014. The company has sufficient cash and ongoing EBITDA to repay the balance at the 2014 maturity date. Buyers of convertible debt typically have a low interest rate and have the intent of converting the debt to common stock prior to expiration date. Debt is commonly extended, restructured and refinanced in the real world.

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