Why are the TMEDS booked as equity? They are debt. When they are converted Jan 2015, additional shares will be issued to cover them. Consequently, book value will be diluted. That is debt. Equity is a secondary share offering. So, debt was issued, it was booked as equity, and the book value of this stock is not what it appears. Is it OK with the investors on this board when management distorts the accounting? Or am I missing something?
While the convertible units have a mandatory redemption element, the mandatory redemption is not settled in cash. Instead, the tMED converts into common stock on May 15, 2015. Total proceeds from the sale of the 8.8mm tMEDs (as of May 11, 2012), net of issuance costs, was $212.3 mm.
Each unit is comprised of a prepaid stock purchase contract, and a senior amortizing note. The note distribution ($0.4063 per quarter / unit) is a combination of interest and repayment of principal. The note balance will equal zero at May 15, 2015. Each distribution (it is not a dividend as many believe....) repays a portion of the note balance associated with the unit, and again, at May 15, 2015, the note balance is repaid. The face amount of this note was $34.6 mm at issuance, as was based on the valuation of a self-amortizing distribution stream that would represent total interest and principal payments of $5.28 per unit, and has a nominal yield of 6.5%. As such, the principal component is accounted for as debt.
The remaining balance of $177.7 mm represents the value of the prepaid stock purchase contract, and is accounted for as equity.
The diluted effect of any such units is not factored into EPS in a period of and EPS loss, pursuant to anti-dilutive rules regarding the computation of EPS (per GAAP).
The diluted effects of any such units is only considered into EPS primary and fully diluted shares outstanding when EPS is income (again, GAAP).
Please stop with your brainless accusations regarding TC accounting practices. They are baseless and without any merit, whatsoever. The mere fact that you are rambling with your nonsense clearly illustrates you have not adequately read the financial statements of Company, and/or are incapable of interpreting them.
You sound like some enviromentalist creep just bashing a mining company with mindless lies, so go stick your head in a toilet, where it belongs. I'm sure it will help you collect your thoughts.
You are correct that when the TMEDS mature additional shares will be issued to redeem them. Those shares will increase the float and dilute shareholder value on a per share basis. It is that simple, you can call me names, you can write 5 pages about peripheral issues, but the dilution will occur.
As I said in another thread as well: Debt never dilutes. Only equity dilutes. You seem confused about basic definitions. You might be in over your head here.
There's no problem with someone not being a cheerleader if they offer something that makes sense. You just seem to be grasping at random things and hoping some of it sounds bad. There have always been risks in TC, but they are priced in and then some.
Yes, your missing a brain and common sense... but your short so you have no incentive to use either. Thats your cross to bare. Yes your free to ask questions although you seem to have off the wall remarks, outdated data and answers that are far from real, so my question to you is, whats your purpose on this board?
If you have problems with the allowed accounting methods and have issues understanding stock valuations, I recommend you take that up with the feds and try and propose a change to GAAP. But if you want answers, be prepared to accept them, although its a long hard fall when gravity is applied to your thinking, Im not sure your prepared for it.
Sorry, that would be your cross to "bear" not "bare". Obviously, it is legal to book the TMED as equity, but why issue a TMED? Most companies do not choose this method of financing Other companies are selling bonds, doing secondaries or private placements. The only apparent advantage to a TMED style financing is that it makes it possible to distort the book value and still comply with the law.