All roads forward lead through a refinancing.
BAM and DMRJ have both lent Implant money. They have an intercreditor agreement between them under which BAM’s claims against Implant’s assets (including IP) are senior to DMRJ’s claims. But once BAM is paid off, DMRJ is next in line. So they both have a “secured interest” in Implant’s assets.
BAM’s debt pays interest in cash alone. Implant has kept current with interest payments, so the total outstanding debt is around $20.2 million. All $20.2 million is due and payable on March 31, 2015.
As we all know, part of DMRJ’s debt is convertible into equity. DMRJ is happy with the conversion rates, so they haven’t pressed Implant to pay the interest on time. And Implant has let the interest payments slide. The biggest concern is a promissory note for around $5.5 million that converts at $0.08 per share…around 66 to 68 million shares. They have $24.0 million in other convertible debt that would convert into about 25 million shares. Plus, they have about $7.0 million in other debt, including a line of credit, that is not convertible. All of DMRJ’s debt is due and payable on March 31, 2015. $2.0 million of the Eight Cent Conversion note cannot be paid until the due date.
So, any acquisition prior to the due date would have to involve negotiations with DMRJ. Why? Implant can’t prepay $2.0 million of the Eight Cent Conversion Note. No buyer is going to purchase Implant with that note outstanding…to do so would subject them to DMRJ converting after the acquisition, and all of sudden the buyer finding itself with a new, unwanted partner.
Implant doesn’t want any potential buyer talking to DMRJ. Why? They are vulture financiers. They will suck every last penny of value out of the company that they can. I mean, get real. Why do they sell at $1.40? Because if they price was $3.00 a share, Implant could probably issue 40 million at a $2.00 haircut and take their scrounging a#% out. They want Implant viable enough to incur more debt, but not strong enough to pay it off. That’s how they make their money.
So, Implant’s best chance to move the stock price upward is the find someone willing to risk around $80 million. It won’t be a blue chip bank, but it won’t be a vulture fund either. It will cost higher than market interest on the debt and some equity (warrants/convertible debt), but if it reduces the interest rate by 5% and cuts DMRJ’s dilution in half, it will be well worth it.
Remember, no refinancing=no buyout.
AI
