I've been reviewing my investment here. It seems we bumped up pretty close to a crisis point on the revolver and term loans with Great Western Bank. That has now been extended, with 44,000,000 in term and revolver debt, but the total debt needs to come down to buy our freedom from their hold. They had us by the short hairs, until our "friends" came in to rescue us with 20-30,000,000 in cash. The agreement looks to me like the convertible shares equal 20,000,000 common shares at $1 each with a 6.25% per year sweetener for them giving us their money. I would rather pay 6.25% interest to our "friends" in exchange for their money than 6% to Great Western. Our "friends" are at least getting into the boat with us. They are also bringing a five year option at $1.20. I think they deserve it. For my part, I'm in at .90 on most of my shares and .70-.80 on the latest. Since our "friends" value the company at 1-1.2 I am certainly a buyer at anything less than .90. The kicker is that they may someday own a large percentage of the company, but will be capped at 34% voting. Help correct me if I am wrong.
The big question is, what does management do with the 20-30 million? Will they pay down debt or use this money to invest in higher quality properties? Obviously one use is to be able to have cash on hand to be able to tell the banks to take a flying leap if they need to. The only thing that would make me really angry is if management gives themselves a big bonus, "just because". They also might not have to take cutthroat offers on discontinued properties just to get a bit of cash.
I bought another 5,500 shares today under .70 and think it will be a good investment. The other concern is the share price being under $1 and that could easily be corrected with a reverse split (horrible though that might seem). They have about nine more months to get the price over $1 for thirty consecutive days. Perhaps more insider buying would help, but they probably have other property sales pending so can't buy during a quiet period. When the CFO buys aggressively when they have open buying times, it gives me great confidence. It really helps to see that this is their own money going into it and not just stock awards.