about half this year, the remainder over the next 2. But you then have to add in more "original" series that they will over pay for. So the actual payments will be higher, and the balance will probably increase. Don't worry though they have a 17% growth rate for revenue.
Now they are issuing 2.3 million shares today to help pay for this (but they are issuing at a price well below where it is as this is convertable debt). So while that helps the cash balance, it means EPS will slow.
My the way, am I the only one who noticed that they paid for getting extra cash?
In February, we raised $500 million in 8 year 5.375% notes with investment grade covenants and used
approximately $225 million of the proceeds to retire our 2007 8.5% notes. The refinancing of the notes,
while being favorable to capital costs in the long term, was the basis for the $25 million pretax, or $16
million net of tax, loss on extinguishment of debt in the quarter.
With the fundraising, we finished the quarter with a little over $1 billion in cash and equivalents.
Market conditions were attractive and we were pleased to add cash to increase our reserves and afford
us the flexibility to invest in additional Originals.
We will convert the 2011 TCV $200 million convertible notes tomorrow (April 23rd) into the
corresponding 2.3million shares. We report diluted EPS as if the debt was converted, so our guidance
for Q2 EPS already accounts for these shares, and there is no change to our cash on hand from this
Whats so funny about this:
They paid 25 million or 9% upfront to raise $275 million in cash...you can get a better rate from Vinnie on the street corner. The actual rate being paid is more like 16% versus the advertised 5.4%.
Dillution of 2.3 million shares, yet zero cash raised...they can't afford to pay the debt so they are diluting shareholders while raising zero cash. Another dilution is coming.
I've been watching all that as well but for some reason even the experts aren't concerned about any of it. Is there actually a day or time or at some point in the future when the bills come due? Or are they going to keep raising long term debt and diluting shares? Even if they plan the latter how can they possibly pay half of 5.7 Bil this year?