Here is your answer from the most recent 6-K section 11. Looks like they will be insolvent in 9mo. You should be able to sue the ones that sold stock the week before this was released for insider trading. Somebody new at least 5 days before.
As at February 28, 2009, the Company has issued $55,940,008 (US$43,967,624) (May 31, 2008 - $31,746,900 (US$32,250,000)) of its US$60 million senior secured notes (“Notes”). The Notes bear interest at an annual rate of 15%. The Notes will mature five years from date of issuance at 120% of the principal. The Company has the right to redeem the Notes at any time at 120% of the principal amount plus any accrued or unpaid interest on the Notes. If the Notes are redeemed within one year of issuance, all prepaid interest is forfeited. After 24 months from the date of issuance of the Notes (May 21, 2010 – 16,877.202 Notes and July 9, 2010 – 27,090.422 Notes), holders of the Notes shall have the right to cause the Company to purchase all of the Notes then outstanding at a price equal to the sum of (a) 120% of the principal amount of such Notes to be purchased and (b) accrued and unpaid interest on the principal amount of the Notes. On an annual basis, the Note holders can cause the Company to redeem Notes equal to 35% of Distributable Cash. Distributable cash flow is defined as cash available after:
a)
satisfaction of the Company’s debt obligations (principal and interest);
b)
satisfaction of the Company’s general and administration expenses, capital expenditures and other expense obligations;
c)
ddeduction for income tax obligations; and
d)
retaining reasonable working capital or other reserves
Reasonable working capital and other reserves are to be defined mutually between the company and the Note holders. As of February 28, 2009 none of these has been defined.
The Company initially issued 60,000 Notes. Each Note was issued with 382 share purchase warrants. Each warrant entitles the holder to purchase one common share at CDN $2.30 for a period of five years from the date of purchase.
The warrants are subject to a weighted average anti-dilution price protection with a floor equivalent to CDN $ 2.15. On September 30, 2008 the Company redeemed 36,032.376 Notes at 120% of their principal value for a total payment of $55,012,791 (US$ 43,238,852).
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PETAQUILLA MINERALS LTD.
(An Exploration Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, expressed in Canadian Dollars)
February 28, 2009 and January 31, 2008
11.
SENIOR SECURED NOTES (continued)
On October 1, 2008, the Company issued an additional 20,000 Notes under the US$60 Million senior secured notes indenture for net proceeds of $20,197,709 (US$ 15,874,958). These Notes contain the same terms and conditions as the previous issue under the indenture with the exception of the 382 share purchase warrants. These Notes did not include any warrants.
The Notes have been accounted for in accordance with HB 3855 “Financial Instruments – Recognition and Measurement”, HB 3862 “Financial Instruments – Disclosure” and HB 3863 “Financial Instruments – Presentation”. Under this guidance, the Company valued the liability component of the Notes and assigned the difference to the warrants. On the valuation date, the value of the Notes was calculated to be $58,487,339 (US$ 58,474,937) and the amount allocated to the warrants $ 1,525,386 (US$ 1,525,063). Prepaid interest of $8,993,685 (US$ 9,000,000) was applied as a reduction of the Notes. The liability component was calculated using a discount rate of 26.65% and a maturity date of two years from issue. The senior secured notes contain embedded derivatives as a result of the call and put options. The Company is unable to fair value the embedded derivatives component separately and thus has classified the combined contract as a financial liability that is held for trading. At February 28, 2009, the Notes have been adjusted to their fair market value of $60,336,777 using a discount rate of $20.58%.
During the nine months ended February 28, 2009 the Company had incurred $4,704,153 (US$ 4,136,246) (nine month period ended January 31, 2008 – Nil) in financing costs. These costs were expensed in the period in which they were incurred in accordance with the Company’s accounting policy.
The Notes are guaranteed, on a joint and several basis, by all the assets of the Company and of the Company’s subsidiaries.
