Using words like 'toxic' however colorful to describe any financing,assumes that the financing will be damaging or destructive.
Not at all. By their nature, floorless convertibles are damaging and destructive. Sure, there's always the chance that the company will by some miracle manage to pay off the note before it's converted and the resulting stock is sold. That, however, would mean the company must come up with the payoff within six months. After that time, any stock converted will be free trading.
HJOE defaulted on its financing arrangement with TCA. TCA sued. The matter was eventually settled when Union and GEL agreed to buy the notes. Now, thanks to its delinquency with required SEC filings, the company is in default on all or most of the notes it's issued.
In the meanwhile, it seems unlikely that any new lender will be willing to step up to the plate.
So unless there's some major development, things aren't looking good.
