I do have a few concerns, well many actually, that I ran across in the 10q. The first is currently they are losing 722k a day. That is a problem. If they don’t improve that run rate it will be ¼ of a billion per year. But my focus for this post is the personal notes $547 million, and promissory notes $106 million are in play and a concern mainly because I don’t know what they put up to get them. They have other debt, but let’s focus on just these two.
Currently they are paying between 8.5% and 13% on those. Roughly 650 million total on the two. Now some are due in 24, some in 26 and others later. They have no hope in paying those off in the time fames. The most likely avenue to extend would to get a bank loan. Which mean the business is going to have to produce at a great deal higher rate. And make no mistake I hope they do. There is price compression as I wrote about so time ago, there will be consolidation in the sector, I assure you. They currently are in no position to expand without causing a house of cards to occur.
MY concern with that is a simple one. Even with safe passing at some points, how do I really feel about this company going into a bank and asking for a 650-million-dollar loan for, let’s say 5–7-year range, yes, I know that a long time but they have to try, at most likely 9 to 10 percent rate when they present the fact they are losing 1/4billion a year and haven’t paid any of the current principal in question off so far.
There are many other concerns, but those pers/prom are a problem for me with this company losing the volume of money they current are.
IMO, this will cause this company to run neg earning numbers for a long time. And yes, you can do that for a long time while the debt is paid off. But it will affect the share price, even if they improve that current run rate of losing ¼ billion a year. Anyway IMO
