OTELCO (OTT)

[renoldman]

Reading what happened, they just turned the debt portion of the IDS into equity and cancelled the equity portion.

Effectively they have turned the hybrid debt/equity shares into straight equity.

It seems like the value of the shares depend on the companies ability to pay back all of its debt.

The company increased cash by $5 Million in last quarter.

According to what has been provided, 75% of cash coming in will be used to pay the debt.

For simplification purposes, will say that $4 Million each quarter will be used to reduce the liability.

Given that their is 2 Quarters in 2013, 4 in both 2014 and 2015 and another last one before the debt is due ... and assuming that they bring $4 Million in each quarter .... They will reduce the debt to 133.4 - 44 = $93.4 Million

So, we are still looking at a bleak picture, and given that the company will not have the ability to finance new growth ... things don't look that good.