Do we both agree that the notes won't be redeemed? They will be converted into shares before the July 15, 2011 by ALL holders of the notes. Basically, MERC is saying, convert the notes now or we will redeem them as early as possible (July 15, 2011). The exercise price is so low (buy MERC shares at $3.30) that all holders will convert and the benefit to MERC is that they can stop paying the interest on the notes.
It will also strengthen their balance sheet, reduce interest expense but also dilute existing shareholders. At least that will be behind us.
They will save over $3 million/year in interest expense (more than .05 EPS.)
There is no unexpected dilution from this transaction. These notes were already included in the fully diluted sharecount of 57 million. But the basic sharecount will increase upon the conversion. That's the way I see it.
OUCH! That is some conversion at 3 bucks and change x $37 mil. But I thought I heard of this plan before. If so, then no much change in stock price is expected, but who knows. Anyhow, a good use of funds. Good luck, my friends. Stan