The $6M number is the result of a Medicare-fraud settlement in 2013 (they didn't admit wrongdoing, btw). Yes, they have been paying it down. It''s around $3.5M now, according to court docs. But, total debt is still $27M!
Not sure what caused Friday's pop. Hope it wasn't people thinking debt was $6M!
For this to work out -- assuming the company plans on closing down -- the four buyers of the assets have to agree to pay pretty much all of the debt. We can count on some cash from January sales, but it won't be a lot. Have to pay Lokey too. And Hercules for continued DIP financing, which I believe will continue into February.
If the company goes the restructuring route, then the debt will be in good shape. Thing is, we have no idea what their business will be. They most likely do have products in development. They could consult on MIS. We just have no idea.
Since it looks like they will have enough to pay Hercules' $7M in secured debt, equity should come out OK in a restructuring scenario. If you're still in this, you have to have faith that the streamlining they did in the fall was part of a long-term solution. The auction helped bring in cash now.
Whatever happens, we'll know the result soon. Good luck to you.
