I don't understand. Is the company getting $35 million from this transaction and then emerging from bankruptcy with plans to sell more shares after emerging from bankruptcy? Is $35 million enough to allow it to emerge out of bankruptcy and keep the FDIC off its back for a while? I thought the initial plan was to raise more money than this.
It looks to me like the FHLB credit facilities were extended only because assets sufficient to cover them were pledged to the FHLB. Given that, I don't think much of your argument that no one would extend credit if the bank was going to fail. (Assuming these were the credit facilities you were referring to)
FHLB borrowings represent advances secured by certain portfolio loans and other eligible collateral. Such advances become due at varying dates and bear interest at market short-term rates (approximately 1.58% at December 31, 2011). At December 31, 2011, unused lines of credit under these facilities approximated $123.9 million. Assets pledged to secure these credit facilities consisted of portfolio loans in the amount of $328.6 million and investment securities with a market value of $4.6 million at December 31, 2011. Continued availability of the FHLB credit facilities is subject to the FHLB's review of the banks' credit worthiness.
You may be right that the cheap stock price will be a distant memory in 6 months. The question is whether it will be a distant memory because the price will no longer be cheap or because the stock will no longer exist.