Not sure what the optimism is about here...
Well, sounds like you are excited about the potential "refinancing" news hitting the wires any time (within one day hopefully) but I fail to see how the news could be that good, to be honest.
There's only a small number of possible scenarios imho and they are the following:
1/ Successful refinancing in terms of a new 175 million loan being issued to the company with a later maturity date of say 2020 or later, something of that nature. This is what most of you guys seem to be hoping for. Some even argue that the company will lower the coupon on these new bonds by a couple of points. I view the probability of this happening as 0. Okay, maybe 0.1% as there are no certainties in life. But if that was going to happen, the company would have secured this 6 months ago when it had more cash on hand left after the latest financing round, gold was above 1300, and it had some time to negotiate. Obviously, this failed, Jennings has left, etc. There is no serious financial institution that will lend 175 million to Banro in its current state. It is cash flow negative even now that its two mines have matured to steady state production, because as I have explained before in very much detail, the debt and streaming deals it had to sign to get there are essentially constraining its cash flow and unless gold rises significantly, free cash flow will remain negative for the foreseeable future.
2/ Outright bankruptcy. Well, I viewed this as likely but if your IR guy says that is not going to happen and no dilution is being discussed, then maybe option #4 will be the outcome. Anyway, there is clearly a discussion in the background taking place between Gramercy, Bayin and Banro, and this is the only card Banro can play if it cannot find a satisfactory agreement with them. It has virtually ZERO leverage in the negotiations, as these two control the senior bonds and the loan they can terminate tomorrow and that the company does not have sufficient funds to repay at this time.
3/ A massive debt for equity swap, in which the senior bondholders (especially Bayin and Gramercy who control more than 50% of those) would agree to cancel say half the debt or so (maybe 80 million) against a massive share issuance that would avoid BK, but would essentially wipe out common shareholders. The second half of the debt could be extended with a later maturity date in that case. But again, if no dilution is currently being discussed, then probably scenario #4 is your best bet.
4/ An amendment to the streaming deals already in place at Namoya and Twangiza, providing an increase in the delivery percentages to both Gramercy and Bayin in exchange for cancellation of a significant portion of the senior debt. You could see something like 8% additional at both mines for ~100 million, which would bring the debt down to about 100 million from 200 (175 + 22.5) and bring deliveries to 16.33% of Namoya prod. and 19+ % of Twangiza for the life of mine at 150/oz. Anyway, while this gives a little more time before sh$t hits the fan and kicks the can a little more, it will make the financial situation significantly more unsustainable going forward than it is already now.
Maybe I see a bit too much gloom, we will see, but objectively analyzing the situation at hand, that's how I see it playing out.
The misconception here is that Bayin ang Gramercy are your friends. They are not. They have a minuscule interest in the equity of the company and almost eclusive interests in secured debt, a loan that has an initial maturity of tomorrow so they can terminate it if the company doesn't improve its standing, and streaming deals that have been well negotiated on their side and are secured by the company's gold production. This does not exactly inspire confidence in the fate of the equity to say the least on their part.
