The accrued interest on the old $43,000,000 is due on June 17, plus you have the debt issuance costs on the new. So, $2,100,000 accrued interest plus about $3,500,000 debt issuance on the new, minimum of $5.6MM comes out of proceeds. You need to think more and do some research before you make a fool of yourself.
Not sure where you're getting these numbers as all their SEC filings regarding new debt did not mention these figures.
Bottom line is instead of paying off $42.8 million in cash; they spent almost 18% ($7 million of $42.8) to retire old debt and create new larger debt vs. just paying off old debt or doing NOTHING.
24 yr. old Harvard kid that works for the Bank snookers SWHC Penny Stock Titans.
SWHC owed debt of $42.8 million due in 2014 before the debt deal at a very high interest rate. After the debt deal, it now owes $75 million due in 2016 at a lower (but still high) interest rate. The number of dollars of total interest due each year is the same before and after the deal but that interest must be paid for 2 additional years.
Although SWHC has $32.2 million more debt, they get only $25 million in additional cash from the lender.
In effect, SWHC is borrowing part of the cost of the 2 buy-back programs.
Why didn't they just repay the very high interest rate $42.8 million loan and do a smaller buy-back? I think they were under a great deal of pressure from the institutions to buy back as much as possible. This is very much like the pressure that Apple institutional holders put on Apple to pay a dividend. So much pressure that Apple also borrowed to pay dividend (and buy back shares too, I think).
Big Boyz put pressure on them to get out as the stock price hasn't even come close to the 52 week high.....yes that is true.
Underwriters or someone (Insiders?) made $7million on the deal and retail scmucks don't even question it. Strange to me, but then I never have trusted this mgmt. team after researching their past practices.
You're right again on the $42 mill......why not just retire the debt altogether?
SWHC Board of Directors visit Gildman Suchs N.Y. office and are awe struck by all the granite and, marble and beautiful people. 24 yr. old Banker sets them down in conference room, with real glass glasses and Perrier water!
The young GS banker explains how he can net them $25 million in a sweet deal.
I'll refinance your $42.8 million in debt at a lower price and give you $25Million to boot, all at a lower interest rate, OK??
ONLY after all the papers are signed, the and the BOD members are still ogling the beautiful attendants, one of them starts to do the math. We get $25, retire $43....that equals $68 million.......WHY DO WE NOW OWE $SEVENTY FIVE MILLION???
"Guys (one BOD to other BOD's), er, uh, I think we done something stupid here. We just gave $7million to that kid from Harvard!!"
Think we need to put a spin on this one!!!....I know let's use those special words......"strategically opportunistic"!
SWHC plans to exchange its current debt -- which is consists of $42.8 million in 9.50% senior notes due 2016 -- for $75 million in lower-interest 5.875% senior notes due in 2017. In total, the transaction will result in net cash to the company of around $25 million, which Smith & Wesson CEO James Debney stated will be used to make "strategically opportunistic" investments.